Efficient Solutions for Passenger Transport* Investing Public Money in High-Speed Rail

Home , Rail transport

19th ACEA

Efficient solutions for passenger transport* Investing public money in High-Speed Rail

december 2012

Ginés de Rus Per Kågeson

University of Las Palmas de G.C. Nature Associates University Carlos III de Madrid

19 Content

Executive Summary 3

Introduction 4

Economic angle 4

Investment in High-Speed Rail infrastructure 4

Opportunity cost 5 Costs and benefits 6 The pricing imperative 7

The environmental impact of HSR infrastructure 7

Factoring in electricity production 8 Embedded emissions 9 Net carbon calculation 10 Noise considerations 10 Land use and infrastructure 10 Other considerations 11 The case of Sweden 11

Intermodal effects, pricing and investment assessment 12

Generalised cost 12 Sound pricing policy 13 Short-term marginal cost 14

Public funding of transport infrastructure in Europe 14

Fixed-price mechanism 15

Conclusions 16

Key questions 16 The challenge 17

* This report is a summary of works undertaken for the BBVA Foundation, the OECD/ITF Transport Research Centre, the Centre for Transport Studies, Stockholm, and the Expert Group on Environmental Studies (Ministry of Finance, Sweden). The authors are solely responsible of the views expressed in this paper. ronmental impact and its operating and and operating ronmental maintenance its impact costs. envi- its line, the constructing of costs investment huge the high-speed line construction, trafficvolumes line construction, more high-speed of than shows that in order to balance the annualised emissions from Analysis intrusion. visual and noise effect, barrier the tion, compensate for the negative duringexternalities construc modes anddly whether transport demand is high enough to volume of demand deviated from less environmentally-frien of environmental though externalities, this depends on the arediversion modest. of benefits time the that air, meaning by or rail conventional lines, of the majority passengers were already traveling by HSR existing some In investment. the justify to needed gers passen of volume the having from far are construction under or operation in lines the of Some end. each at cities populated densely big, two with km 500-600 around is potential full its and the general public than among economists. sing that HSR investment is more popular among politicians surpri not is It return. social apoor with compatible are share lines are heavily subsidized, so high and load market factors Many construction. its with associated costs investment the lineA requires high-speed high volume of demand to share costs. infrastructure the charged being not users rail of result the cases many in is success this but km 400-600 of ridors decision. underproject consideration before taking any irreversible ofthe comparing importance social and of benefits thecosts of suggestion the beyond lines, HSR new of construction the to respect with position apriori other any have not do economists and technology railway this about bad or good the answer is There context-specific. is nothing intrinsically and question, empirical an course of is This HSR. of cost nity A Executive Summary The point is whether society is willing to pay the opportu the pay to willing is society whether is point The A potential benefit of HSR investment is the reduction reduction the is investment HSR of benefit A potential The line standard where medium-length HSR develops cor in share market of terms in well very performs HSR benefits highly enough tobenefits compensate for comfortably, but whether they value these more and faster travel to want people whether not is (HSR) rail high-speed with question key the money, public spending of ways other s with ------

combination with low CO low with combination in aviation from passengers of diversion high of acase in 10 million trips annual are one-way usually required. It is only tive net-present value. aposi of case the in even addressed be should investment the of timing optimal the Hence, cases. most in postponed be can investment the as critical is invest to moment right the of question the conditions, these In demand. and costs with istructure irreversible and associated there is uncertainty infras HSR of construction The however. technology, this with case the be to seem not does This decision. never´ or `now of akind were investment the if as lines high-speed new different. quite be may result final The capacity. expand to way best the evaluate then and modes transport all price optimally could it or split, modal the change to policy asecond-best as investment rail amassive justify then and charge for air below and social road marginal transport costs going to be charged. For example, the government could are modes transport alternative the how consider to need We addressed. explicitly be to needs policy Pricing project. the of lifespan the during pricing transport for case the is This are many assumptions that might seriously bias the results. there and counterfactual the of construction a careful requires of business travel by telecommunication. and/or sea short shipping routes, or replacement the partial and incentives to improve the of utilisation inland waterways rise to fewer emissions, e.g., rail track congestion charges growing imbalance supply between and demand that give a to responses other be may there However, capacity. of lack for met be not previously could that rail by transport for demand be must there happen, to this for But trains. of types other to allocated be may tracks old the on capacity excess Thus network. rail pre-existing the from diverted be will traffic more than 7 million). still (but suffice trips fewer substantially that production tricity There is considerable pressure on governments to build The economic evaluation of permanent infrastructure Building a completely new line means high-speed 2 emissions from the marginal elec - - -

3 19th ACEA Scientific Advisory Group Report 4 Efficient solutions for passenger transport

Introduction An economic evaluation of projects would, in principle, lead to the best ones being selected, but there is overwhel- Transport infrastructure and services do not follow the ming evidence that this is not happening. The context in same long-term planning criteria. Private operators, inclu- which the social appraisal of projects is carried out cannot ding car owners, decide how much and when to invest in be ignored in the economic assessment of major infras- new capacity (and this also includes technology). Private tructure projects. The institutional design is a key element airlines decide which type of aircraft to buy depending on for understanding public decision-making when different their demand expectations and business strategies. There is levels of government are involved, as is the case in the EU or strong evidence that competitive air transport services work generally when the national and regional governments of the reasonably well (Morrison and Winston, 1995; 2005). This is same country do not necessarily share the same objectives, also true of bus transport services, at least under a scheme of particularly with regard to where public investment should competition for the market (Nash, 1993; Mackie and Preston, be made. 1996; Preston, 2004). This report is organised as follows: Section 2 provides On the contrary, roads, airports, ports and railway tracks an overview of the costs and benefits of HSR investment. and stations ultimately belong to the public sector (with some Governments promote HSR construction as an instrument for exceptions). Although many crucial transport decisions are in a better environment. The environmental benefits and costs the hands of private operators subject to market discipline, of HSR construction and operation are analysed in Section 3. the public sector can heavily influence future modal split and The opening of new HSR lines changes the modal split in the configuration of transport networks through investment, intercity corridors and Section 4 addresses the important pricing and regulatory decisions affecting capacity. This is consequences in terms of intermodal competition, pricing the case with high-speed passenger trains operating largely and investment. Section 5 covers the positive question of within the public sector, both in the areas of infrastructure why governments invest in HSR infrastructure with special and services. The endorsement of railways by the European attention to the consequences of institutional design on Commission, and especially of the development of a high- long-term investment decisions. Section 6 concludes with speed rail (HSR) network, has provided this rail technology a summary. with public funds and political support.

The future of interurban transport is expected to be domi- 2. nated by strict budgetary constraints and the introduction of efficiency-oriented policies affecting pricing and investment Investment decisions, such as the application of polluter-pays and user- in High-Speed Rail infrastructure pays principles, and the planning of infrastructure on a strict economic basis. The ultimate objective is to have an “integrated and sustainable transport system” that promotes eco- Some facts on HSR infrastructure investment nomic growth and social cohesion (European Commission, • Sunk costs represent more than 50% of HSR investment. 2009). What is the role of HSR infrastructure in this context? This implies huge costs for poor decisions due to irreversibility. Economic angle • HSR investment develops maximum potential at medium length corridors (400-600 km). From an economic perspective, the question is quite • To be socially profitable, HSR requires high-demand to simple. Like any other technology, HSR is not inherently good compensate costs. or bad. Its social value resides in its ability to solve transport • Environmental benefits rarely justify the investment problems that are significant enough to justify its opportu- because of emissions during construction period. nity cost. Cost-benefit analysis can help answer this crucial • Right design of the institutional framework is necessary question, but we do not need to go any further to maintain to resolve information problems and conflict with interest Scientific Advisory Group Report that the economic case for HSR investment depends on groups. Project appraisal is essential in this setting to take the prevailing conditions in the intercity corridor where the decisions about transport investment. construction of the new line is planned, in particular the level

ACEA of demand, the degree of congestion, value of time, expec- All over the world, governments of different political th ted time savings from diverted traffic, generated traffic and orientations are investing in HSR infrastructure. In some 19 the net external effects. countries the enthusiasm is more intense than in others. kilometres. HSR in measured world the in countries first the of one is it network, rail conventional the in congestion) less much (and countries other than density traffic less much with because, case aunique is Spain worthy. socially is governments of are whether this investment studying still type whose example, for Sweden, or Norway as countries European such to contrast in HSR, on keener been have Spain, and economic and financialviability.Other countries,like France of evaluation the of cost the financing beyond gone not has HSR to allocated money the and now, until approval definitive to building HSR lines, though they have to been reluctant give closer now are US the and UK The pattern. single no is There costs benefits go by rail, according to the Commission. should passenger of transport the majority medium-distance 2050, By States. Member all in network railway adense ning maintai and 2030 by network rail high-speed existing the of length the tripling 2050, by network rail high-speed pean Euro the of extension important an envisages (2011) Policy track. HSR anew introduce to study HS2, London between so-called and Edinburgh, is under the Now, 2010). (Nash, track the of curvature the of because up to 200 km per hour, using trains tilting where necessary conventional increasing network, speeds on tracks existing for example, upgraded their conventional rail using their Sweden, and UK The services. rail passenger intercity ving Other countriesOther have chosen alternative ways of impro The European Commission’s White Paper on Transport Transport on Paper White Commission’s European The Figure 1 Figure

Time profile of environmental costs andbenefits including the period of construction Con s t r u c tion pe r iod - - -

tion prior to the project (de Rus and Nash, 2007; de Rus, 2008). Rus, de 2007; Nash, and Rus (de project the to prior tion situa prevailing the to respect with etc.) safety, and comfort generalised cost of travelling (time and cost savings, reliability, the in achange as viewed be can infrastructure, rail speed high- as such projects, large in investments and operation in already are corridors the of most transport, intercity of case the In it. expropriate can or land the own that governments of hands the in is which invest, to option the to value ficant asigni give characteristics These 1994). Pindyck, and (Dixit cases most in delayed be can decision investment the since uncertainty, so the optimal timing is a key economic issue, are essentially irreversible and to subject cost and demand infrastructure transport in invested assets of type The funds. 2010). Nash, 2007; Nash, and Rus de 2007; bela, Nom and Rus de 1997; al., et (Levinson economists among more popular among politicians and the general public than is investment HSR that surprising not is It return. social poor so high and load market factors shares are compatible a with of this rail Many infrastructure. lines are heavily subsidized, construction the with associated costs investment high the offset to threshold minimum some reach not do that meters para key other with good as not but km, 400-600 of ridors Opp Investment in infrastructure requires publicInvestment in infrastructure significant cor in share market of terms in well very performs HSR ort Ope un r ation pe it y c r iod o st - - - - -

5 19th ACEA Scientific Advisory Group Report 6 Efficient solutions for passenger transport

The investment in HSR infrastructure is one of the Costs and benefits feasible `do something´ alternatives to deal with transport- capacity problems in intercity passenger corridors, but is The direct benefits of HSR in terms of time savings, gene- not the only one. The economic case for HSR option is more rated traffic and avoidable costs in terms of competing modes, likely when there are capacity constraints in the conven- are usually not enough to compensate for the construction, tional rail network, roads and airports; and the release of maintenance and operating costs. The magnitude of direct capacity generates additional benefits for freight, long-haul benefits depends on the prevailing conditions before the flights and other side effects of the marginal capacity that project. The benefits also depend on whether there is an avoid major investments. Another potential benefit of HSR upgraded conventional railway able to run above 150 km/h investment is the reduction of environmental externalities, and convenient air services. If this is the case, it is difficult to though this depends on the volume of demand diverted from find a socially profitable investment based exclusively on time less environmentally friendly transport modes and whether savings, generated traffic and cost savings in the conventional the demand is high enough to compensate for the negative modes, unless demand is above 10 million passenger-trips in externalities during construction, the barrier effect, noise the first year of operation and grows at a significant annual and visual intrusion (Kågeson, 2009). rate (de Rus and Nombela, 2007, de Rus, 2010).

Some critics of HSR investment point to the high invest- Investment in HSR modifies the equilibrium in intercity ment costs associated with the construction of a new high- passenger transport. Most of these corridors in developed speed line. However, the point is not whether the passenger countries are already in operation and HSR projects entail prefers to travel with this technology instead of the conven- no more than the introduction of faster trains, changing the tional modes, nor the high cost of the HSR, but whether so- generalised cost of travel with respect to the prevailing situa- ciety is willing to pay its opportunity cost. This is of course an tion before the project (de Rus and Nash, 2007; de Rus, 2009). empirical question and the answer is context-specific. There is nothing intrinsically good or bad about this railway techno- An interesting issue related to intermodal competition logy and economists do not have any other a priori position in intercity corridors is the asymmetry between the different with respect to the construction of new HSR lines, beyond the operators. Although this is case specific, the separation suggestion of the importance of comparing social benefits between infrastructure and services that characterises and costs of the project under consideration before taking road, bus and air transport puts the airlines at some disad- any irreversible decision. vantage. Vertical unbundling may create some problems for

Figure 2 Costs and benefits of a standard medium distance corridor

Costs benefits

5 % Accidents 5 % Trains and congestion

10 % Maintenance Infrastructure 15 % Generated demand

25 % Operating and Scientific Advisory Group Report maintenance cost 40 % Cost savings

60 % Infrastructure investment 40 % Time savings ACEA th 19

note : Net present values computed at 5% for a 50-year project life. The size of figures represents actual magnitudes. sing links. There alternatives. something´ exist several `do operate once demand motivates building new tracks on mis would that services high-speed for prepared is it as time same the at trains traditional for it use and line overall the of parts on track rail HSR an build to feasible is it Moreover, future. it could be profitable tobuild a line today and another inthe as false, is nothing´ or `all of idea the Even value. present net a positive of case the in addressed be should investment the of timing optimal the Hence, cases. most in postponed be right moment to invest is critical, since the investment can and demand. Under these conditions, the as question to the is irreversible and associated there costs is with uncertainty infrastructure HSR of construction The technology. this with case the be to seem not does this However, decision. never´ or `now of akind were investment the if as lines high-speed new interdependent. should not overlook. Investment and pricing decisions are projects new of evaluation economic the that issue an is this Therefore, lines. new of analysis cost-benefit the of result the railway the operators, intermodal equilibrium and eventually the of competitiveness the to crucial is infrastructure HSR decision regarding and construction maintenance costs of playing ground for intermodal competition. The public pricing the affect that sector public the in taken decisions pricing to sensitive very are shares market the where case, this in sive deci but general, in issue akey is This services. HSR for ged determining what first out prices without aregoing tobe char carried be cannot investment HSR of evaluation economic The railways. the to respect with government the of policy Thewill final project. depend impact heavilyon the pricing HSR the of value social the of regardless occur will change distance interurban corridor changes the and modal this split, airports may determine,airports at the margin, the user´s choice. waiting time, of and going the through disutility congested consequences in terms of modal since split, access-egress, its has fact This station. the in time waiting and station the ture and were services integrated, controlling the access to railways operatecontrary, as high-speed if the infrastruc the On process. the of control lose airlines the where even true, as travel time has a strong component within airports, being from far is this practice, in but, market the in supplied unbundling shouldtheory,the not vertical final affect product In apackage. as service the of control lose that airlines the T prici he There is considerable pressure on governments to build medium aparticular in line HSR anew of construction The ng i ng m perati v e - - - -

• • • • expected to be the best available technology in, say, 2025. in, technology available best the be to expected ronmental performance of different modeson what couldbe envi long-term the of assessment the base to be may blem pro the around way One feasible. hardly hand, other the on is, ahead decades technologies future of estimates Making when all modes become cleaner and more energy efficient. time over diminish to expected are they as sense make not ofimpact different modes basedon today’s differencesdoes life span of new Comparing the environmental infrastructure. long the with deal to how concerns them of One addressed. requires a to number be of methodological difficulties become aninstrument for important curbing CO maybarrier alsobe effects, important. noise, and climate change. Land use, including intrusion and parameters areThe exhaust emissions, most important of HSR infrastructure HSR of The environmental impact 3. Nilsson and Pydokke, 2009, Kågeson, 2009). 2008, Rus, (de produced benefits overall the of percentage trafficemissions throughamounttypically HSR may to asmall reducing of benefit socio-economic the that suggest Studies climaticof benefits HSR may not significant. be particularly 2008). UIC 2008, UNIFE the emissions (Banverket, production from electricity 2008, the of highly impact beneficial, suchthuson neglecting a shift is services train with travel car substituting that believe also balance anyGenerally, potential negative sidethey effects. will mode, faster even an being aviation, from away ashift that think Proponents consumption. energy rising of price the at ronmentally beneficial, alwaysdespite coming high-speed envi is HSR that claim that sector rail the of organisations They may have and listened to interest environmentalists

P HSR causes noise, intrusion and barriers and intrusion noise, causes HSR traffic new generates mode, afast being HSR, for accounted are production modest when emissions indirect from marginal electricity is transport road to compared difference the However, cars or aviation than km seat- HSR consumes less energy and fewer emits emissions per ros and cons of high-speed rail high-speed of cons and ros Investigating the environmental pros and cons of HSR HSR of cons and pros environmental the Investigating Some governments promote HSR believing that it may theTransport environment in numerous affects ways. However, independent research has concluded that the

2 emissions. - - - 7 19th ACEA Scientific Advisory Group Report 8 Efficient solutions for passenger transport

The assumption would then be that these technologies will Instead the marginal effect on emissions of greenhouse dominate transport at mid-term of the depreciation period gases of rising demand for electricity is what matters. The of the new infrastructure and may be taken as a proxy for marginal power production may differ somewhat between the environmental impact of a mode over an entire period of countries as well as over the months of the year and between 50 years. day and night. The differences between national European markets, however, are gradually diminishing as a result of the Based on this methodology, Kågeson (2009) found that emerging common electricity market and improved trans- investing in a new 500 km HSR line would result in a net mission of electricity. Kågeson (2009) assumed the marginal

annual reduction of CO2 emissions of about 9,000 tons per effect of growing demand for electricity in Europe to be on 1 million one-way trips. Traffic on the new line was in this case average 530 grams per kWh over the next 50 years. assumed to consist of 20 per cent of journeys diverted from

aviation, 20 per cent diverted from cars, 5 per cent from long- Even in Scandinavia, where the average CO2 emissions distance coaches, and 30 per cent from pre-existing trains. from power production are less than 100 g/kWh, the average The remaining 25 per cent is newly generated traffic. effect on emissions from marginal demand is between 660 g and 700 g (Vessia and Byskov Lindberg, 2008; Sköldberg Factoring in electricity production and Unger, 2008). All else being equal, rising demand for electricity will make it more difficult to phase out power plants Another methodological problem is how to account for that burn hard coal or lignite. the emissions from the electricity production required for satisfying a growing demand for rail transport. More than In this context, it may also be relevant to note the out-

50 per cent of current European power production is come of shrinking demand for electricity on CO2 emissions. In based on the combustion of fossil fuels. Under dynamic the short term, the power plant with the highest variable pro- circumstances, such as when investment in high-speed rail duction cost would be the unit to close first. This will mostly results in modal shift and newly generated traffic, average be plants that use lignite or hard coal. Windmills and hydro figures cannot be used for calculating the climate effect. power stations would not reduce production in a situation of

Figure 3 Simulated emission per passenger-kilometre (g C02 / passengerkm)

Aviation 0,04

0,02

0 20 40 60 80 100 120 140

Bus 0,2

0,1

20 40 60 80 100 120 140

y Car 0,1

0,0,5

robabilit 0 P 20 40 60 80 100 120 140

HSR 0,1

0,05 Scientific Advisory Group Report

20 40 60 80 100 120 140

Conventional train 0,2 ACEA th 0,1 19 0 20 40 60 80 100 120 140 overall emission of greenhouse gases. the on impact zero have definition, by thus, would rail speed fromA aviation shift to trains following investment in high- 2012. in ETS EU the to subject became which aviation, from emissions for true equally is this so, If increases. electricity for demand much how matter no ETS) (EU Scheme Trading Emissions European the of cap the exceed to allowed be not will emissions The obsolete. become has account into tion meansproduc that taking the marginal of effect electricity gas. and coal of use the increase and gasoline and diesel trains would predominantly reduce demand for kerosene, electric to buses and cars aircraft, from ashift perspective demand. is shrinking, and average figures in situations of increasing indeed, strange, tovery use marginal figureswhen demand energy in consumption. the reduction primary reflect to 2.5 by multiplied be should improvements ciency effi electricity of effect the that recommends (2006/32/EC) onDirective Energy End Useand Efficiency Energy Services diminishing demand. For this reason, the European Union’s 1. 1. Probability 2.5 equals an electricity efficiency of 40% which is normal in coal-fired condensing power stations. power condensing coal-fired in normal is which 40% of efficiency electricity an equals 2.5 Some argue that carbon dioxide emissions trading asystems from that obvious is it above, the on Based Figure 4 Figure 0,05 0,05 0,05 0,05 0,05 0,2 0,1 0,1 0,1 0,1 0 0 0 0 0

Million annual trips required for emissions offsetting construction 10 10 10 10 10 20 20 20 20 20 1 It would be be would It 30 30 30 30 30 Hig Hig h Hig ar sh - - h h Hig ar sh dive e of p h dive rs e of new gene r Cent 40 40 40 40 40 ion fr r rs -exi ion fr al e al s om c ting t emissions of from the a construction reference high-speed modes that are required for compensating for the embedded annual passenger trips and the magnitude from of other shift modes to rail. from high-emitting shifting inthe reduction greenhouse gases that results from traffic by offset be must emissions embedded these perspective, railinvestment in to high-speed make sense from a climate a new For 2009). Rail, (Network concrete and steel of use extensive of because partly substantial, often are link speed the estimated CO other gases and substances that contribute to global warming, range of a factor of 1.0–1.3 of the radiative forcing of the CO the of forcing radiative the of 1.0–1.3 of afactor of range the within falls value the that believe to reasons are there km 500 of distance a For flights. long-distance for than tude smaller that for do not short-hauls involveat flying high alti significantly is factor The altitude. and horizon time with varies effect total The emissions. gas greenhouse the of estimate atotal get to factor forcing aradiative by multiplied be may Emb s timate om aviation ars r Westin and Kågeson (2012) determined the amount of To take account of the fact that airplanes emit several several emit airplanes that fact the of To account take The embedded CO r ated t ain pa e and bu dde 50 50 50 50 50 r ss c affi d e enge s e s m rs on issi 2 emissions per seat kilometre from aviation 2 emissions from a constructing high- 60 60 60 60 60 s 70 70 70 70 70 80 80 80 80 80 2 . - 9 19th ACEA Scientific Advisory Group Report 10 Efficient solutions for passenger transport

rail project, when depreciated over the lifetime of the infras- the marginal electricity production that substantially fewer tructure. The specific emission numbers were taken from trips suffice (but still in the order of 7 to 9 million trips). Network Rail (2009). Since the expected lifetime of the components differ, the embedded emissions were calculated Noise considerations using a steady-state approach where all components were assumed to be continuously replaced and recycled at the Problems associated with noise from vehicles and ves- end of their lifetime. The authors therefore chose to calculate sels are location-specific. It is therefore difficult to calculate the carbon annuity based on a 50-year analysis period. average noise costs for different modes. However, a few general observations can be made. Intercity journeys by car Net carbon calculation or bus usually take place on motorways or other high-quality roads that allow speeds of 90 km/h or more. These roads are The size of the net carbon benefit from a future high- often built so as to avoid crossing through minor towns and speed train link depends on a number of parameters, among other settlements. That means fewer people are victims of them: the energy per seat kilometre needed for moving dif- such noise compared to noise from traditional railway lines, ferent vehicles; the carbon dioxide emitted from the combus- which were often designed to go through the heart of towns. tion of fossil fuels used for vehicle propulsion; the origin of the However, new high-speed lines may avoid crossing through electricity; the average rate of occupancy for different trans- smaller towns where no stop is made anyway. port modes; and the distribution of diverted traffic from other modes of transport, newly generated traffic and pre-existing A 50 per cent future reduction of external noise from train passengers. The future values of all these parameters road vehicles, trains and aircraft appears to be technologi- are associated with uncertainty. cally possible. Additional improvement can be achieved by using noise-absorbing road surface materials or installing Westin and Kågeson used a parametric model to calcu- absorbents close to the railway track. Shielding by noise-

late the change in CO2 emissions per passenger kilometre protection walls may significantly reduce the impact, but only from a person shifting to high-speed rail from another travel relatively close to the barrier. People living further away will mode. To capture the uncertainty of the input estimates, the be affected by the diffuse background noise that barriers Monte Carlo simulation was used with a probability distribu- cannot stop. Where aviation is concerned, the only way of tion over likely future values of each parameter. In the simu- shielding is by improved insulation, particularly of windows. lation, the change in emissions per passenger kilometre and the resulting net emissions for five scenarios were calculated The noise created by large carriers amounts to less per using random draws from the parameter distributions. The passenger kilometre compared with an equally high-decibel process was repeated a million times until stable simulated sound from a smaller vehicle or vessel. Trains that can seat distributions for the resulting net emissions were obtained hundreds of passengers therefore create less noise per for the competing transport modes. passenger kilometre than cars even when making much more noise when passing by. However, on motorways, trucks Westin and Kågeson focus on a few parameters for which are the dominant source of noise. The marginal contribution the choice of value is highly influential. These are: the margi- of an additional car to an already busy highway is minimal. nal electricity production; the total radiative forcing factor of short-haul aircraft; and the assumed occupancy rate of the The conclusion is that the social marginal cost caused by various vehicles and vessels. Assumptions on how genera- traffic noise cannot be included in a generalised comparison ted traffic is attributed to shifts from other modes and on new- of the different modes. A shift from one mode to another may ly generated traffic are also important. The central values for increase or decrease the impact of noise on human health all other parameters were taken from Kågeson (2009). The depending on local circumstances. highest and lowest values in the distributions were selected in order to provide estimates that significantly differ from the Land use and infrastructure central value without being completely unrealistic. Scientific Advisory Group Report The use of land and the impact on landscape is also to a The analysis shows that in order to balance the annua- large extent site-specific. However, some general observa- lised emissions from high-speed line construction, traffic tions can be made. Aviation, for obvious reasons, consumes

ACEA volumes of more than 10 million annual one-way trips are much less land per passenger kilometre than other passen- th usually required. It is only in a case of high diversion of passenger transport modes. An additional flight generally does not 19

gers from aviation in combination with low CO2 emissions from cause any extra damage in this sense, while growing traffic of responses to a growing imbalance between supply and and supply between imbalance agrowing to responses of types other be also may there However, change. climate affect also would construction where capacity additional of kinds demand for rail would services require investment in other in the absence of lines, investment growing in high-speed insignificant. be to expected be could shift modal from emissions such on impact the and small be to likely are modes to exhaust emissions, any remaining differencesthe between respect with Thus, levels. sustainable to reduced been have also will plants power from emissions regulated the term, ger lon the in Therefore, operations. their up clean to had have or decommissioned been have either will plants power dirty the 2025 by However, NOx. and particles sulphur, of quantities huge emit still them of some and plants, power coal-fired in almost negligible. be would fleet new entire the from impact aggregated the that little so emit to expected be may vehicles new years, 10-15 Within decline. to continue will and decades two last the over reduced drastically been have buses and cars from sions emis tailpipe The plants. power in biofuels and fuels fossil of internal combustion engines as well as from the combustion is limited and no new barrier is formed (Kågeson, 2009). 2009). (Kågeson, formed is barrier new no and limited is by adding a new lane or the track, marginalon effect landuse simply created is capacity new If difference. make a will traffic to capacity additional be infrastructure built that more intercity for calls congestion when only is It zero. usually is use land on impact marginal The traffic. local with extent some to and vehicles with share bound for infrastructure other destinations airport. anew even or runway additional an require awhile, may, after volumes * new barriers are created. and occupied is land new means This possible. sometimes is location railwayexisting within partial or motorway corridors lines arehigh-speed built often in new corridors although reasons, these For 2008). (UIC, 7kilometres than less be not ideally should and km/h, 300 of speeds accommodate to kilometres 5.5 least at be must radius curve horizontal The tates a layout with large radius curves and limited gradients. necessi traffic High-speed traffic. of type this for designed ly especial railway anew requires exists trains such for tructure o

96 Directive to according (EMS) System Modular European ther An aspect notAn aspect considered above is that, the possibility produced usually is trains by used electricity marginal The of types all from occur emissions exhaust Regulated Introducing high-speed trains where noIntroducing high-speed previous infras trains intercity traditional or car, bus by traffic Intercity c d si on erati s on / 53 / EC - - - - -

investment in new transport infrastructure can be reachedinvestment in infrastructure new transport heavy of objectives the whether consider to cause is there overcrowded. not are motorways the where regions in option an be might or pipelines. EMS relevant, for instance increasing the use of inland-waterways on truckskilometre-charging heavy (Kågeson, 2011). introducing as well as trains for fee track the raising and dues ture. Levelling the playing field implies reducingthe fairway infrastruc the expanding with associated costs the less much cost, marginal short-term the cover even not do that fees track lowest Union’s European the enjoy contrary, the on trains, marginal but alsoFreight costs, the costs. fixed infrastructure short-term the only not recover fees these and ports, Swedish at calling ships all on dues fairway of enforcement the by oncosts all modes. Currently, shipping is short-sea restrained field by enforcingthe sameprinciple of for liability external trains, which by international are standards rather short. freight country’s the of length average the increase to be may Sweden, of case the in option, Another 2009). Pydokke, and (Nilsson track existing of capacity the increase substantially signalling systemsand investment in passing siding may overcome by other, less expensive measures. Improved problems in thewhether capacity rail freight can sector be rail line, high-speed there isfitable cause to investigate unpro otherwise an in investing for areason as this taking before However, system. railway pre-existing congested otherwise the in trains by transport freight double than more to Sweden in corridors HSR of creation the of years five within freight transport. freight transport. course, reduce the overall climatic of impact passenger and of would, track to road from shift A further capacity. of lack for met be not previously could that rail by transport for demand be must there happen to this for However, trains. of types other to allocated be may tracks old the on capacity excess Thus network. rail pre-existing the from diverted be will traffic replacement of business travel by telecommunication. and/orwaterways shipping routes, short-sea and the partial charges and incentives to improve of the utilisation inland demand that give rise to fewer emissions, e.g., congestion T o case he From a climate as well as an overall point of view, of point overall an as well as aclimate From more be may solutions alternative countries, other In playing the level to be could Sweden in measure A third possible be would be it that believes (2011) Åkerman Building a completely new line means high-speed f Sw * combinations fuelled by grid electricity e d e n - -

11 19th ACEA Scientific Advisory Group Report 12 Efficient solutions for passenger transport

by measures that imply using fewer resources. For precisely ted de facto in the case of high-speed trains operated by a this reason, the Swedish government requires the four-stage single firm with the exclusive use of dedicated infrastructure. principle to be applied in the assessment of all proposed new Buses and cars share the same roads, competing airlines infrastructure projects.2 The Swedish Transport Administra- share airports and high-speed rail is technically operated as tion must carry out its assessment of potential projects in the a single business, even if, from an organisational standpoint, following four steps: the maintenance and operation of the infrastructure are sepa- 1 Measures that affect transport needs and choice of trans- rated from service operations. port mode; 2 Measures leading to more efficient utilisation of the exis- HSR has other advantages over airlines beyond vertical ting network; integration (with subsidized prices), reflecting some structural 3 Minor investment in road or track improvement; differences. Airports and airlines would still serve a large num- 4 Major investment in new capacity. If the first steps are suf- ber of markets using the same airport capacity, and it is not ficient in providing the required capacity, the fourth step clear that airport congestion management would be better should not be considered. with vertical integration. The HSR advantage in this case is that capacity is used to serve a very small number of markets Conclusions (O-D pairs), and this makes it possible to reach very high levels • HSR is likely to reduce greenhouse gases from traffic of reliability. • The reduction is modest and it may take many decades for it to compensate for the emissions caused by construction These differences on the supply side have a significant • Traffic noise is likely to increase as passengers shift from impact on the demand side. The vertical integration of aviation and road transport to HSR infrastructure and operation in the case of HSR is a signifi- • A new HSR line will cause intrusion and barriers which, de- cant advantage with respect to air transport in terms of the pending on local circumstances, may be more or less serious generalised costs of travel. HSR is more reliable than air transport, and access and waiting time much less cumber- some. Airport and airlines managers do not necessarily have 4. the same objectives and, as a matter of fact, the generalised cost advantage of HSR lies outside the travel-time segment of Intermodal effects, pricing the trip. In the case of roads, the differences are even clearer. and investment assessment Road infrastructure and operations are vertically separated. In contrast with the single operator of HSR, there are many users Medium-distance intercity corridors (around 500 km) driving their own cars with free access (sometimes paying a with road, air and rail transport in open competition have a toll) to a limited-capacity infrastructure. Road transport has modal split equilibrium that is very sensitive to small changes the advantage of reducing access and waiting time to almost in the generalised prices of the alternative modes of trans- nothing and the cost disadvantage appears in the travel-time port. The differences between these modes of transport segment. are quite obvious, but they have several things in common. On the supply side, they all need infrastructure to provide Time savings are not the only consequence of HSR invest- services combining vehicles, labour and energy under pri- ment. The reduction in the generalised cost of travel gene- vate or public ownership, with infrastructure and operations rates new trips, and the diverting of traffic from other modes vertically integrated or unbundled; on the demand side, they of transport may contribute to a reduction in congestion, acci- all involve a transport service carrying passengers who have dents and environmental externalities. Unfortunately, the net to pay different generalised prices in terms of money, time, impact on the alternative modes is not necessarily positive. quality and safety. The reduction in congestion is one effect on those who continue to use the previous mode of transport, but the reduction in Air, maritime and road transport are vertically unbun- operations in response to lower demand volumes negatively dled and different operators use a common infrastructure, affects the adjustment to travel preferences of those users. Scientific Advisory Group Report sometimes with free access and sometimes with payment of an access fee. Usually the operators are private and the Generalised cost infrastructure is public or privately operated under a conces-

ACEA sion contract. Road, air and maritime transport services are The generalised cost of travel includes three basic th vertically separated from the infrastructure operator, and components: time, quality and money, with “quality” under- 19 railways are unbundled in some cases and vertically integra- stood in a broad sense to include comfort and safety. The

2. However, this principle was not observed by a recent Swedish government committee that investigated the feasibility of two high-speed railway lines. policy that not only allows the transport user to choose the the choose to user transport the allows only not that policy pricing sound a requires Efficiency choice. his of costs tunity oppor the reflect should prices optimal, socially be to choice pricing unresolved. This also leaves the problem of intermodal competition and corridor. the in railways the by charged prices low the on dependent is air with competition in HSR of success the that indicates which low, quite is costs generalised the in ferential dif the where corridors some in case the apparently is This money. taxpayers’ with compensated is he but change, the with benefits time loses user average the words, other In explains in the negative differential the generalised cost. component price The higher. is time travel of value total the though alternative, air the with compared HSR for lower is cost generalised the cases, some In projects. HSR of bility profita social the on eventually and split modal on pricing car. by travel to them for reasonable it make may together, travelling persons of number and cargo personal as such circumstances other with together which, asuburb, in are that destination and/or departure of points have may They centre. city to centre the money component. thecomponent, modal choice may be highly dependent on time-cost the in differences actual the given that, found have we component, each of time the of values the with weighted time. When the whole door-to-door time is considered and in-vehicle of terms in lose but time, waiting and access-egress time. from may Those air shifting benefitfrom transport lower waiting and egress access, of terms in lose but reductions time Passengers from shifting road benefitfrom transport travel- the prevailing operating conditions of the conventional rail. isimpact on travel time with a magnitude depending on access,barely egress affect and waiting time. The main services HSR rail, conventional with Compared travel. rail urban corridor on through impact the generalised its cost of infrastructure. HSR to access the regarding sector public the of policy pricing the to role akey concedes this and alternatives, the and HSR between be may component time the close how seen have we (2012), Rus de in evaluated ones the like corridors distance access-egress, waiting and in-vehicle time. In medium- time component is far from being homogeneous. It includes Sound prici It seems clear (equity issues aside) that for the user´s user´s the for that aside) issues (equity clear seems It According to de Rus (2012), some consequences of consequences some (2012), Rus de to According city from go to need or want travellers all not Moreover, Investment in HSR changes the equilibrium in the inter- ng p ol ic y - - - ding than more optimal. capacity provi be would government the case, the not is this where corridors the In capacity? for pay to willing users are question: efficiency adynamic face we targets), equity as passengers HSR of think to difficult is (it side equity the to addition In only pay pay costs. variable and costs capacity non-users users as covered, are costs capacity which in way the from reduces to effort minimizeAnother drawback costs. comes The second is related to incentives, as subsidization usually economy. the of rest the on imposed distortion the of terms in cost additional an has gap the cover to needed taxation the problem of Additional financingcosts. the infrastructure is reason first The cost. avoidable strictly the above charge to reasons other are there but costs, marginal short-run the rage cost. Many argue that passengers should only pay ave to compared low very be can costs marginal short-run above demand (forecasting error, or indivisibilities both), well is capacity when case, extreme the In welfare. increases system the on imposed cost additional the to excess in pay 2003). Nash, 2003; Rothengatter, (see costs infrastructure cover to funds public for need the and costs average below prices means pricing cost marginal short-run investment, HSR of case the In terms. practical in important the consequences of choosing a pricing principle are quite butcapital, both are assumptions and unrealistic in transport of divisibility demand forecasting andming perfect perfect allowing for an of optimal adjustment capacity. cost total in change the for accounts cost marginal Long-run capacity. network aconstant given added, is demand marginal cost is equal to the change in total when costs new natural alternative marginal is Short-run costs. long-run the that argue critics Some Europe. in lines HSR some with case the is as capacity, excess is there and built is network incompatible with cost recovery when rail the infrastructure easy task. pricing according to marginal social is costs far from being an costs, joint and fixed and indivisibilities significant scale, of that situation. particular Given the presence of economies in train the running of cost´ social `marginal the is answer the ture under time particular or demand conditions? In principle, infrastruc the of use the for charged be operator arail should arecosts already included in the How generalised cost. much transport. road or air, rail between choosing when also but mode, atransport within option best With a fixed capacity, any additional demand willing to willing demand additional any capacity, afixed With marginal are and costs short-run Long-run equal assu Charging according to marginal short-run cost is Let us assume that and supplier-operating costs external - - - -

13 19th ACEA Scientific Advisory Group Report 14 Efficient solutions for passenger transport

Short-term marginal cost require that the willingness to pay for capacity be higher than the investment costs or any other demand unrelated to cost The consequences of charging according to the short- during the lifetime of the infrastructure. This does not solve run marginal cost on the expansion of HSR lines are signifi- the problems of fair competition between different transport cant. Low prices favour the reallocation of demand from the modes or the equity issue of taxpayers paying HSR fixed competing modes and encourage demand generation, with costs, but at least it puts a filter on the most socially unprofi- a feedback on the future expansion of the network. Pricing table projects. according to short-run marginal cost leaves a key question unanswered: are rail users willing to pay for the new HSR ca- Given the record of economic evaluation of projects in pacity? Unless this question is answered before investment Europe, cost-benefit analysis provides no guarantee against decisions are taken, marginal-cost pricing is not a guarantee the construction of white elephants. It is therefore crucial to for an efficient allocation of resources. examine the institutional design under which the investment decisions are taken. The social marginal cost of a passenger trip by a particular mode of transport, in a particular place and time, has three different parts: the user marginal cost (user cost and the share 5. of the producer cost, including infrastructure and vehicles), the cost to other users and the rest of society (congestion, Public funding of transport external cost of accidents and environmental externalities) infrastructure in Europe and to taxpayers (the share of the producer cost that has been subsidized). National and supranational governments support the implementation of this new rail transport technology with In many lines, HSR revenue is far from covering total public funds. To understand the impact of this public support costs. It might be argued that economies of scale and strong on investment decisions, it is useful to distinguish between indivisibilities justify the deficits, but the question is whether two levels in the process of funding major infrastructure users would be willing to pay for the HSR infrastructure before projects. The first relates to the institutional design, in which new lines are built. HSR prices act as signals that transport supranational and national governments (or national and users take as key information for their decisions on where, regional governments) agree on the projects to be financed. how and when to travel, or even whether or not to travel. The second is related to the selection of contracts for the construction and operation of the infrastructure. This level When infrastructure costs are not included in transport includes the relationship between the national (or regional) prices, according to the rationale of short-term marginal government benefitting from the project and the operator(s) social cost, the problem is that the price signal is telling consu- responsible for the construction and operation of the project. mers that it is efficient to shift from road or air transport to rail transport. This, of course, could be true in the short-term The co-financing system in the EU is the so-called when optimal prices are not affected by the fixed costs of the “funding-gap” method consisting of a type of cost-plus existing HSR network, but the world is dynamic. financing mechanism in which the difference between the investment costs and the discounted revenues (net of ope- The problem is that prices that do not include fixed infras- rating costs) of the project are partially covered by the supra- tructure, which act as long-term signals for consumers in their national organisation. The European Commission finances travel decisions, and consequently in the future allocation of a percentage (the co-funding rate) of this financial gap. The resources between transport modes or between transport, incentive embedded in this mechanism is perverse, since the education or health. An extensive HSR network can be deve- subsidy increases with total investment costs and decreases loped based on suboptimal prices decided by the govern- with net revenues. This financing mechanism penalizes the ment that are not linked to the opportunity costs of its exis- internalisation of externalities and congestion, leads to ex- tence, but once the network is built, bygones are bygones, cessive demand and biases the capacity size and the choice Scientific Advisory Group Report and speculation on the counterfactual with a different alloca- of technology. tion of resources and their effect on welfare is not very useful. The fixed cost/total cost ratio in HSR projects can be 50

ACEA The role of cost-benefit analysis in these circumstances per cent or higher (Campos et al., 2009), so these projects th is important. Even if we accept that short-term marginal cost are always candidates for supranational funding. In a world 19 is the right pricing policy, investing in a new HSR line would of perfect information, the supranational agency would charge for the external costs. external the for charge politician will choose maximum number of users and will not Consequently,the lower the of the probability re-election. and be, will voters of surplus consumer the lower the ture, higher the price for the use of the new national infrastruc from user-paysdepart or polluter-pays since principles, the andexpensive, pricing will latest technology mega-projects of favour in abias is There pricing. optimal introduce to or haveGovernments no incentive to minimize investment costs efficient. be to costly is it system), financing cost-plus other incentives of the financingmechanism. the behaviour of the national government will respond to the andreal marginal are world, and efforts costs notobservable the In pricing. cost social marginal introducing and costs ject pro minimizing thereby effort, of level maximum the exert to maximize social welfare by forcing the national government the co-financing rate” (ECOR rate” co-financing the determining of system present the by discouraged is charges pays adopted principle since is only partially increasing user calculation ofrate. the co-financing In particular, the polluter- and general the objectives between rules policy applied for rate.co-financing In addition, some basic dilemmas exist the for criteria pragmatic only found have evaluators “the of the period. implementation The document concludes that, extension for requests many too and foreseen; than periods position to claim additional payment; longer implementation agood in then was who contractor, the for activities tional beginning of implementation; cost overruns due to addi latewas changes started; to dossiers; late design/tender construction before but approved was project the after to problems such as improper designs; technical changes led deficiency this and sound, technically were projects ther Problem descriptions and analyses are sometimes lacking. tative contribution of the project to the declared objectives. 2005). The evaluations generally fail to assess the quanti and economic of (ECOR priority projects lable funding, paying less to attention the technical content been focusing primarily on timely commitment of the avai period 1993-2002 concludes that national governments have the in Fund Cohesion the by co-financed projects of a sample of evaluation post ex An ports. or roads as such infrastructure transport other as well as analysis, cost-benefit a strict pass to low too was demand the when lines HSR some of tion kable that member countries have promoted the construc The these conclusions. evidence It supports is remar any with (as mechanism gap funding present the With Moreover, it was impossible to generally determine whe S Transport, 2005). YS Transport, Y S Transport, ------

inefficient pricing will also be suffered by the politician. the by suffered be also will pricing inefficient of costs the as high now is pricing optimal introduce to tive of funding and are the residual The for incen claimants effort. nue and cost inefficiencies, since theyreceive a fixed amount make national governments responsible for insufficient reve nue.financing mechanism The ideais ofto the fixed-quantity reve or costs to unrelated funding external of quantity fixed way. efficient most the in funds supranational the allocate to governments for tool useful analysis is aprice mechanism, very cost-benefit financing fixed- the with However, funds. supranational obtain to ments simply a bureaucratic requirement to enable national govern is analysis cost-benefit method, funding-gap the over, with More- price. optimal socially the charge and costs reduce to financingmechanism mayprovide the incentives necessary system. of investment cost scheme, towards a more incentive-based mechanism, reimbursement essentially co-financing partial a EU incentive low-powered current the from away move to proposes (2006) for. Florio accounted explicitly are tives ting requires interests a different approach inwhich incen framework. analysis cannotplanners be in modelled a conventional cost-benefit tionship national between governments and supranational asymmetric information and the different objectives, rela of acontext In planner. supranational the from funds more obtain to order in evaluations project manipulate to tives share may Governments the same have objectives. incen necessarily not do they and regions, own their in constructed be to projects infrastructure the of benefits and costs the in general informed better than about supranational planners are governments national discussed, already have we As ted. F i xe The fixed-price mechanism, in this context, is an ex ante ante ex an is context, this in mechanism, fixed-price The afixed-price (2010), Socorro and Rus de in argued As The existence of information asymmetries and conflic These are results disappointing not completely unexpec price d- m echa n is m ------

15 19th ACEA Scientific Advisory Group Report 16 Efficient solutions for passenger transport

6. Traffic noise is likely to increase marginally as passen- Conclusions gers shift from aviation and road transport to HSR. Building a new high-speed railway line will cause additional intrusion Consumer preferences and producer costs reflected in and barriers, which, depending on local and regional cir- market competition between firms and modes of transport, cumstances, may be more or less serious. subject to the minimum regulation required both to internalize externalities and guarantee a basic level of accessibility, are Key questions far from being the only forces shaping transport networks in the years to come. Deregulation of transport services has There is no cause to refrain from investing in HSR on envi- not meant the end of government intervention. Infrastruc- ronmental grounds so long as the carbon gains made in traffic ture construction with public funds and price regulation can balance the emissions produced during construction and the exert a remarkable influence on the future form of interurban noise and intrusion caused by the new line are not significant. transport corridors. Whether the future networks are the best However, investment in infrastructure for modal shift should option is difficult to answer a priori but there are some indica- only be considered when traffic volumes are high enough to tions that this might not be the case. carry the cost. The principal benefits of high-speed rail are time savings, additional capacity and generated traffic, not a The high-speed rail investment decisions taken and the reduction in greenhouse gases. subsequent infrastructure pricing policies set by the public sector have a profound impact on the allocation of resources The key question is to determine whether these social in the transport sector and the rest of the economy. It seems benefits are greater than the costs incurred by society due to obvious that high-speed rail infrastructure is an appropriate the construction and operation of high-speed lines. In other option for some corridors, but a very expensive one in low- words, the question is not whether we like high-speed rail or traffic areas where alternative modes of transport can satisfy not, but whether we are willing to pay its costs. demand at much lower cost. Why have some countries decided to invest in HSR? This All over the world, investment in high-speed rail infrastruc- last question leads directly to the institutional design and set ture has dramatically modified the position of the railway with- of incentives of each country. This is really important in prac- in the set of transport alternatives the passenger faces in his tical terms, because the public nature of these investments, travel choices. Although the decline of the market share of rail- along with the separation of decision-making and financing, ways has not changed, high-speed trains have contributed to as happens to be the case in the EU with the co-financing of a substantial recovery in rail market share in medium distance HSR projects, can explain investment decisions that would corridors where they compete with road and air transport. not have been taken without supranational funding. A similar game is played between national and regional governments High-speed rail generates social benefits, which come in countries where these projects are supported by the natio- from time savings, increased reliability, comfort and safety, nal budget. and the reduction in congestion and accidents in alternative modes. Releasing capacity in the conventional network, which It is convenient to reinforce the role of the economic can be used for freight transport, is an additional benefit of the appraisal of new high-speed rail projects, co-financed with investment in the construction of new lines. European Union funds, instead of using the rhetoric of regional development to support the expansion of the network. Investment in high-speed rail is likely to reduce green- High-speed rail infrastructure is not good or bad in global house gases from traffic compared to a situation where the terms. There are socially profitable projects and others which line is not built. The reduction, though, is small and it may are not. Economists can help to identify those projects which take many decades for it to compensate for the emissions are socially worthy and whose benefits justify the sacrifice of caused by construction. In cases where anticipated journey leaving other social needs unattended. This research project volumes are low, it is not only difficult to justify the investment hopes to contribute to this aim. Scientific Advisory Group Report in economic terms, it is also hard to defend the project from an environmental point of view. Under such circumstances, it may be better to upgrade an existing line to accommodate

ACEA somewhat higher speeds as this would minimize emissions th from construction and reduce emissions from train traffic com- 19 pared to HSR. transport solutions for solutions needs. their and accessibility mobility transport better were there where countries or regions in anetwork of lines around the world, fostering demand and the expansion HSR many for common are costs average total than lower much Prices cost. marginal ante ex the with compared low quite is traffic additional of cost marginal the built, is line the of the total (even costs higher for low lines). density Once aremore costs than sunk, and half affects this irreversibility fixed the built, is infrastructure HSR the once not, or profitable pricing based on the polluter-pays and user-pays principle. efficient of introduction the over access free and upgrading, oversive new solutions, maintenance construction and expen less and efficient more over technology modern and expensive most the of favour in a bias creates governments) government relationship (or that of regional and national current situation in which the member country-supranational the overcome help will that mechanism incentive anew for need is a there interests, conflicting and information of tries asymme of Because insufficient. clearly is infrastructure new approving for requirement as a analysis cost-benefit of use groups interests of and politicians. Toindustry reinforce the special the beyond society, for options best the find to helps The Socially considering. worth aspect adynamic is There The challenge is to design framework an that institutional cha lle ng e - -

17 19th ACEA Scientific Advisory Group Report References

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European Automobile Manufacturers Association

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