Navigant Research Blog

Smart Cities and Smart Transport: To Charge or Not To Charge

Eric Woods — August 8, 2011

Mobility has been a common theme of recent Pike Research blogs. Dave Hurst and Brittany Gibson offered interesting perspectives on how transportation patterns – particularly those related to private vehicle use – are evolving. Around 20% of a city’s greenhouse gas emissions may be attributable to private and public transport. It is not surprising, therefore, that the transportation system is one of the pillars of many smart city projects. Road and rail links are the economic arteries of the city, and traffic congestion is bad for the environment, the economy, and citizen health. A recent study for the San Francisco Municipal Transportation Agency (SFMTA) into the possible benefits of introducing a congestion charging scheme estimated that the annual economic loss to the San Francisco transport region due to congestion came to more than $2 billion in 2005 and that this would exceed $3 billion each year by 2030. Tough as the transport challenges are in North America and Europe, they are dwarfed by those facing cities in the developing world as they cope with the growth in car use while trying to meet sustainability targets and prevent congestion becoming a barrier to further economic development. For this reason, smart transport is one of the four key elements Pike has identified for any smart city strategy trying to balance the goals of sustainability, citizen well-being, and economic development.

Targeting this opportunity, IBM recently launched its IBM Intelligent Transportation Solution, integrated with the Intelligent Operations Center for Smarter Cities and building on a number of key traffic management projects that IBM has been involved with. Three significant projects – in Singapore, Finland, and Brazil – were highlighted in a briefing last week.

IBM has been working with the Singapore Land Transport Authority (LTA) on traffic management since 2006 and has recently helped it to develop a traffic prediction system in the congested Central Business District. According to IBM, the IBM Traffic Prediction Tool is able to predict future traffic speed and volume with 85% accuracy. This information provides traffic controllers with the insight to better manage traffic flows during congested periods using the city’s traffic control and Electronic Road Pricing systems. The second project is a transport system monitoring solution developed with the Finnish Transport Agency. IBM has helped the agency integrate data on 78,000 km of roadway from a diverse set of systems and applications to provide a holistic view of the road network. The data can then be used to optimize traffic flows, forecast traffic conditions, and develop “what if” planning scenarios. The third example is Rio de Janeiro where traffic management is tied into a broader incident management system based in the City’s Operations Center. The aim is to provide a view on traffic conditions including traffic flows, congestion, roadworks, and accidents.

All these systems are using advanced technology to help optimize traffic flows. A different, complementary approach is to try to reduce or manage traffic volumes through charging. Although congestion charging is not part of the Intelligent Transport Solution, IBM has been involved with some of the most important schemes around the world including Singapore, Stockholm, London, and Milan. However, congestion charging schemes continue to be a highly contentious solution to city transport problems.

Singapore was the first city to introduce a road charging scheme to address congestion with its Area Licensing Scheme in 1975, this was followed by the Road Pricing Scheme, which extended coverage to major expressways. In 1998, both schemes were replaced by the Electronic Road Pricing (ERP) system. Under ERP, motorists pay each time they enter a congestion zone and prices can vary according to traffic conditions. Singapore was followed by congestion schemes in Stockholm and London, both of which are generally seen as successful. Though the impact in relation to other changes in traffic and transport patterns remains difficult to assess, studies have estimated that the Stockholm and London schemes have reduced greenhouse gas emissions by 14% and 16%, respectively, and cut congestion by 22% and 30%.

Despite the success of the existing schemes, other cities have been slow to follow in the face of public resistance, strong lobbying, and political uncertainty. A planned scheme for New York never made it to the legislative stage and U.K. congestion charging schemes were rejected by referendum in Edinburgh and Manchester. In San Francisco, the authorities are now carrying out further consultation and research; any decision about implementing a congestion charging scheme is at least two to three years away and any trial is unlikely to begin before 2015.

We expect more cities around the world to look at congestion charging and time-of-use (TOU) pricing as a means of modifying driving behavior. It is a debate that follows a similar pattern to those around TOU pricing for energy consumption, but is even more contentious. In both cases, consumers and citizens are presented with considerable uncertainty over the impact of significant changes to their lifestyle, which tests their trust in politicians and service providers. In order to implement such changes, the benefits in terms of the individual and society need to be made clear, as do the costs. This has to be the basis for a public debate going forward which must also include honesty about the impact of doing nothing, be that gridlock, energy costs, or environmental damage. Strong political leadership is also vital.

The points that Brittany made in her post regarding the expectations people have about choice in transport are also relevant. Creating a sense that we are active participants in the transport systems of our cities and not passive victims will be vital if we are to have the necessary conversation about how we want those systems to evolve. This can take many forms. The most basic is to make sure that our smart transport systems are also engaging with the users of the system. Rio’s Operation Center, for example, already has a twitter feed informing motorists of current traffic conditions and the city‘s Digital Director is keen to find other ways to share information and generate new applications for citizen engagement.

In the future, intelligent traffic systems will provide real-time monitoring of traffic flows, environmental conditions (temperature, rainfall), driver behavior, infrastructure failings, and accidents, for example. In general, sensor technologies will allow more insight into how a complex city transport network is operating and how it can be managed. Using that information for a flexible and integrated use-based charging system will be a tempting option for many city authorities, but they will have to do a lot of convincing to win over a skeptical public.

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