June 2015 - n°36

Motorways in the European Union:

perspectives and evolutions

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ransportation of goods and people within and across European borders is the physical manifestation of the flows of the European economy. Motorways remain the most important example of this flow as they make up a large majority of the intra-European freight and passenger transit. Since the conception of grand European corridors after World War II, these arteries of economic growth have come under pressure from increased traffic and neglect, all of which has increased since the turn of the century. Mobility is a right of each European citizen, however the challenges involving the financing, safety, and sustainability of motorways mire the access to a comprehensive single transportation market. Further integration remains central to the European Union’s policies as President Juncker continues to advocate for a single European market throughout the economy. This is inline with the upcoming Road Package 2016. Standardization of transportation network administration through the connection of national operators with international ones is a simple first step in this streamlining process. It is a European parliamentary priority as it redoubles its efforts to pass international laws that facilitate the follow-up of foreign transgressors of domestic motorway laws. It has already been proven to be a great deterrent and Member States have come out in support of legislation like this. Growing infrastructure is no longer the priority of the European government. Rather, interconnecting existing national and modal networks between themselves, maintenance and sustainable development are more important features of the policies discussed. As the respect for the environment and our awareness of the responsibility towards its well being becomes a pillar of programs such as Horizon 2020 and institutions such as the European Parliament, the importance of motorways and its large contribution to carbon emissions cannot be ignored. The focus is now on the complete lifecycle—preservation and maintenance of existing road structures—going as far as the recycling of future roads. In addition, implementing co-modal and multi-modal transportation represents a concrete contribution to enhancing the environmental performance of the European motorways, as it would alleviate congestion among other benefits. Reinforcing cross-border network corridors, or transnational motorways, provides higher mobility for the people of Europe. Unfortunately, Member States slashed infrastructure spending as a way to deal with the sovereign debt crisis. Safety targets, a key feature of the sustainability of motorways, are harder to reach if Europe is unable to finance the data-driven innovations that can improve emergency support and response. Technological advances are explored to provide a more efficient motorway experience for lorry drivers and passengers, but the consensus remains a call for increased investment. It is largely up to the European Union to provide, at the very least, the framework for the financing of motorways. Whether the private-public partnership must be reviewed, it is generally agreed that more private funding would not only be fair but also provide much needed support to the conservative national budgets. This can come from improved interoperability of toll payments though progress remains slow as the European Electronic Toll Service, for example, is unable to achieve more functionality and lower risk and cost. This push for one system is harder to deploy internationally and legislation is being reviewed. It is clear that these systems should play an integral role to the consolidation of a single transportation market. However, expectations and goals provided by the White Papers are also being reviewed. All of this should lead to a more efficient European Fund for Strategic Investments and rebrand the Structures and Cohesion Fund under President Juncker’s administration. In addition, national governments voice domestic concerns that are closer to the citizens’ perspective. For example, freight efficiency through the use of cabotage is a problem-solution complex the European transport system must tackle. The interests of European citizens lie within a clearer and easily enforced legal framework. What can be a boon for the environment is held back by poor administration and inequalities in single market competitively. New demands by society shape the interests and obligations of the government that in turn transforms the functions of construction and operating companies of Europe’s motorways. Greater coordination and cooperation with the European Union has been achieved as the safety and environmental objectives in many regional operating spheres have been surpassed. A shared public responsibility is now felt throughout the levels of administration of motorways. Ultimately, the steps taken towards prevention and training must be complemented by safer human behavior through continued education and awareness campaigns. The perspectives on the future of motorways in Europe are as complex as the number of motorways themselves. Globally, a single transport market is only useful if it remains competitive and sustainable. It cannot be achieved without a neutral discussion of economic benefits, environmental concerns, and citizens’ safety. The future of the flow of goods in Europe depends on these issues and this paper explores what the evolution of motorways in Europe will look like.

Laurent Ulmann

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EDITORIAL - Laurent Ulmann

Motorways in the European Union: perspectives and evolutions The Journey to Create a Single European Market for Road Transport Violeta Bulc, Commissioner for Transport,

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European Commission

Highway infrastructures: public or private responsibilities?7 Anrijs Matīss, Latvia Minister for Transport Establishing a solid Single European Infrastructure with a lasting change in investment Alexander Dobrindt, Member of the German Bundestag,

Competitiveness and sustainable development in highway projects: can they match? Michael Cramer, MEP, Chairman of TRAN Commission

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Driving the Road Safety Agenda Forward in Europe  14 João Aguiar Machado, Director-General, DG Mobility and Transport, European Commission

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Safety on the highways: a technological perspective 15 Dominique Riquet, MEP, Vice-Chairman of TRAN Commission

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Motorway concessions: a resilient model for new mobility patterns 16 Pierre Coppey, VINCI Deputy CEO in charge of Concessions

Federal Minister of Transport and Digital Infrastructure

We need road freight without social dumping Magnus Heunicke, Minister for Transport, Denmark

I/ P  romoting an efficient, safe and environmentally friendly mobility

“Should we support road freight transport on motorways?”11 Dan Ťok, Czech Minister of Transport

Positioning Europe as a global decisive actor in innovation and sustainability: the role of road infrastructure José Díez, Director of Institutional Relations

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(European Union Road Federation)

Despite improvements, the number of deaths on Europe’s roads remains ’intolerable’ Ines Ayala Sender, MEP, Member of

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Environmental and safe transport: challenges and a success story for SIAS motorways Paolo Pierantoni, SIAS motorways group -

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Committee on Transport and Tourism

Chief Executive Officer

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II/ Implementing a proper European road network

Connected Vehicles - the Road to More Capacity Magda Kopczynska, Directorate-General for Mobility

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Developments in road and vehicles Michael Møller Nielsen, General Delegate, IRU

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and Transport (DG MOVE) - European Commission

Interoperability of transports in the European Union 26 Pavel Svoboda, MEP, Chair of Committee on Legal Affairs (JURI)

Optimizing the European road network Kallistratos Dionelis, Secretary General, ASECAP Regional European Electronic Toll Service (REETS): Getting it going Hubert Resch, Director of ASFINAG

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III/ F  inancing the evolutions of highway infrastructures in Europe Financing the evolutions of highway infrastructures in Europe Wim van de Camp, Member of the European Parliament,

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EPP Group, Coordinator Transport Committee

“Connecting Europe from West to East, from North to South: Cohesion Policy invests in road transport” 33 Walter Deffaa, Director-General, Regional and Urban Policy, European Commission

Financing Motorway PPPs in Europe Guy Chetrit, European PPP Expertise Centre

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(EPEC), EIB Advisory Services

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Concession model: a key tool for financing and operating road infrastructures in Europe Bruno de la Fuente, Director of Concessions- SEOPAN

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Time to review the legal framework for toll road concession system 38 Christine Revault d’Allonnes Bonnefoy, MEP, Member of Committee on Transport and Tourism

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Management : The European Files / Les Dossiers Européens - 19 rue Lincoln, 1180 Brussels - www.europeanfiles.com - ISSN 1636-6085 - email: [email protected] Publication Director and Editor-in-Chief: Laurent ULMANN Intern: Raphaël Benros Copyrights: European Union

Motorways in the European Union: perspectives and evolutions

The Journey to Create a Single European Market for Road Transport Violeta Bulc Commissioner for Transport, European Commission

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here is still some distance to travel to complete the single European market for road transport services. Its completion is critical considering the cross-border nature of transport and the importance of the road transport sector for the economy. In 2012, almost three quarters of all inland freight in the EU was transported by road.

On the passenger side, the relative importance of road as a mode of transport is even greater: on land, road accounts for more than 90% of all passenger-kilometres: 83% for passenger cars and almost 9% for buses and coaches. We must simplify the rules for international transport, so they are transparent, enforceable and allow fair competition. While EU transport operators are free to carry out international road freight transport services in the EU, the provision of national road freight transport services is still a largely protected area for domestic hauliers. Foreign hauliers only have small market share of some 2.5% of all national transport operations for hire and reward. EU rules on national road freight transport services are also very complex and difficult to implement and enforce. Concerning passenger services, operators are generally free to operate occasional services throughout Europe, but regular services are subject to authorisations which are often not granted. The opening of the long-distance coach market in Germany in 2013 resulted in a 5-fold increase of the number of passengers – there is huge potential to grow the market. Coach services are important especially on routes where rail is not an option.

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For a fully functioning single European transport market, we need to invest. I am of the opinion that infrastructure maintenance budgets should be ring-fenced, funded with regular revenues from user charges. I also favour a distance-based rather than a time-based charge since distance-based charges ensure the polluter pays relative to the use of the road. We need to have a careful look at social rules in the area of road transport. The current patchwork of national rules, which may not necessarily enhance social conditions of drivers, risk creating legal uncertainty, unnecessary administrative burdens and fragmentation of the internal transport market. I genuinely believe that there is a need to tackle all these obstacles to a single European transport market for road transport. By doing so, EU citizens, businesses and the environment will benefit from improved, more efficient services and rates, and road transport operators will be able to fully optimise the use of their fleet. I would invite all stakeholders to engage in this process together with the Commission, as we are planning a Road Package for 2016 which will encompass many of the issues mentioned above.

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Highway infrastructures: public or private responsibilities? Anrijs Matīss Latvia Minister for Transport

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he Latvian road system provides direct access to destinations in the east (Russia) and southwest (central/western Europe). The roads are well connected to northern Europe (Finland and Sweden) via other countries and ports. Generally, all roads are fully public and toll-free, as funds for maintenance are collected from excise duty on fuel and vehicle registration fees paid to the Road Traffic Safety Directorate. With financial support from the EU, Latvia has upgraded sections of the E67 (Via Baltica) – the first pan-European transport corridor, connecting Finland and the Baltic states to Poland and Western Europe. To divert increasing transport flows from the centre of the capital city, Riga City Council has constructed the Southern Bridge over the river Daugava and plans to construct a Riga Northern Transport Corridor – a highspeed road crossing Riga from east to west and bypassing the city’s historic center. However, as we all know, almost every country’s financial capacities are more or less limited. Desires and necessities differ from the opportunities. One of the best ways how to supplement them and to meet the growing demand for infrastructure development is Public Private Partnership (PPP) projects. It’s collaboration between public and private sector based on a long term agreement which aims to provide services traditionally assigned to the competence of public sector and to maintain the infrastructure necessary for the development of those services. There are also other relevant reasons why Latvian Government has decided to collaborate with the private sector. For example, creating diversification in the economy by making the country more competitive in terms of its facilitating infrastructure base as well as giving

a boost to its business and industry associated with infrastructure development or extracting long-term value-for-money through appropriate risk transfer to the private sector over the life of Project – from design/ construction to operations/ maintenance. In Latvia, implementation of public-private partnerships is still a novelty. However, in recent years some business projects have been taken in collaboration with the private sector, mostly by municipalities. There are three significant highway projects that are planned to be implemented by using PPP model next years. They all are connected with the highway route E67 (VIA Baltica) and are in line with European Union’s land transport policy, promoting a mobility that is efficient, safe and secure, improving the connection of the continent between East and West, North and South, reducing traffic jams and closing gaps between Member States transport networks. Those objects are: • E67/A7 Riga – Kekava Road; • E67/A4 Baltezers – Saulkalne Road (Riga bypass); • E67/A1 Riga – Lilaste (Road). Serious preparation works are started on the first of mentioned objects (E67/A7 Riga – Kekava Road). Project foresees: the existing single carriageway two-lane motorway reconstruction to the four traffic lanes (dual carriageways) - length of section 2.2 km. A new high-speed road construction: with four lanes (dual carriageway – A7 8.9km) and between the A5 and A7 motorway 5.46 km two lanes (one carriageway) and construction of two-level traffic nodes in the main intersections. This Project also improves life quality and traffic safety in Kekava. Total investment cost is 74 million EUR, timing 2017–2020. This Project couldn’t be implemented without a participation of private sector. Of course, there are also other measures done by the Latvian Government to improve the highway infrastructure and also safety. A lot of

work has been done every year to consummate road specifications regularly. Also a warranty period of all new-built and reconstructed state roads is extended. In all projects, financed from the European funds, periodical maintenance is being done timely. Efficient road network is a key to economic activity and mobility of people and goods. While basic road infrastructure (pavement) has been modernized on E67 transport corridor in Latvia and Estonia, traffic information systems still need considerable improvements to ensure efficient, environment friendly, safe passenger and cargo transport. That’s why State Joint Stock Company „Latvian State Roads” with the support on Latvian Government and together with Estonian colleagues have submitted an application to Central Baltic Programme offering solutions how to increase efficiency and safety of passenger and cargo mobility in the Central Baltic region by introducing Intelligent Transport Systems (ITS) on E67 transport corridor. Implementation of the Project ensures that ITS elements are introduced in critical nodes of transport on entire E67 transport corridor, crossing Estonia (192 km) and Latvia (202 km). It facilities joint technological approach to ITS and ensures seamless quality of transport information pattern in the entire transport corridor. Introduction of ITS elements on E67 via pilot investments into development of adaptive traffic management – roadside variable message signs (VMS), road weather information systems (RWIS) and other equipment providing to traffic participants timely, efficient and accurate traffic information. The Project will foster safety of passenger and cargo transport and diminish CO2 emissions due to timesaving of transport on road. Highway infrastructure – public responsibility, also to involve private partners and to provide the appropriate preconditions for the successful PPPs implementation.

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Motorways in the European Union: perspectives and evolutions

Establishing a solid Single European Infrastructure with a lasting change in investment Alexander Dobrindt Member of the German Bundestag, Federal Minister of Transport and Digital Infrastructure

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ince the outbreak of the sovereign debt crisis, we have seen intensive discussions in Europe about what are the drivers of growth, prosperity and jobs. The prosperity pyramid of developed economies provides us with a clear answer to this question: Infrastructure is the basis of future prosperity. Without infrastructure, there would be no mobility, no education, no jobs, no innovations, no wealth creation, and no prosperity. This holds true for Europe in particular, where nation states are connected more closely than in any other region in the world. Our infrastructure – and the motorway network in particular – is a key location factor of the European economy, a major magnet for international investment and an important link for more than 500  million people. It forms the basis of the world’s largest single market, the European Economic Area, and

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is a prerequisite for further economic growth in Europe. Recent forecasts have shown that we can expect a significant growth of freight and passenger transport flows also in the years ahead. This is a tremendous challenge – and an enormous opportunity, because an increase in mobility and an increase in affluence are indissolubly linked. In order to seize this opportunity, we must provide more money for our infrastructure on a permanent basis. The growth formula for Europe consists of two elements: First, we need to stay on target with regard to sound finances und a union of stability, and second, we must provide targeted impetuses for growth and invest in a highcapacity infrastructure. This is no contradiction. On the contrary, both elements belong together. Investment provides an impetus for growth, growth creates affluence and affluence mobilises financial resources which, in turn, can again be used for future investments and the consolidation of budgets. This process gives greater confidence to both industry and investors, creates scope for future generations and generates benefits in terms of the public good. Because: Every billion we spend on our infrastructure produces a growth effect worth more than 3 billion euros.

In Germany, we have applied this formula and brought the consolidation of the budget together with a change in investment. Since 2014, for the first time in 45 years, the Federal Republic of Germany has not incurred any new debts and was able to break even. At the same time, we are investing 11 billion euros in the modernisation of our infrastructure – and raising the investment volume by around 40 percent by 2018. This is an all-time record and the result of an investment ramp-up with three key elements: additional federal funds of 5 billion euros until 2017, extension of the ‘user pays’ principle and greater involvement of private capital. As we are putting greater emphasis on the ‘user pays’ principle by extending the HGV tolling scheme and introducing an infrastructure charge for passenger cars, we are making a fundamental system change. So far, the funding of our infrastructure has been largely based on two pillars: fuel duty and motor vehicle tax. With an infrastructure charge which is to be paid by all keepers of passenger cars, we are now adding a third pillar. This strengthens the ‘polluter pays’ principle and fulfils the target of the European Commission which, in its White Paper of 2011, calls for a “move towards full application of ‘user pays’ and ‘polluter pays’ principles (...)”. This system change is based on the regulatory policy rationale of establishing a clear link between revenue on the one hand and expenditure on the other. The infrastructure charge will feed straight into the funding of our roads – on a permanent basis and ring-fenced for this purpose. Nevertheless: In the long run, we will not be able to fund the modernisation of our infrastructure solely from public budgets. Therefore, my aim is to involve private capital to a greater extent by means of public-private partnerships. Previous experience in this field has shown very clearly: Construction of projects is more economical, one major factor which harms our national economy, the congestion on our roads, is mitigated – and by creating modern roads according to the requirements we are able to

relieve pressure on the overall network. Both Europe and Germany benefit from this, as well as motorists and investors, who, especially in times of low interest rates, find attractive return options. For this reason, we have developed a new generation of public private partnerships where, for the first time, institutional investors can participate in national infrastructure projects by means of a project bond. A list of corresponding projects with a volume of 15 billion euros is currently being established. Additional public funding, a system change towards the ‘user pays’ principle and more private capital mark a lasting change in investment – with a significant increase of funds for the infrastructure. I am convinced: This change in investment is also required in Europe. Just for the current funding period from 2014 to 2020, 250 billion euros is estimated to be required for the core network of the trans-European transport networks (TEN). However, under the Connecting Europe Facility (CEF) financing measure, only 26 billion euros will be available. Therefore, the investment package of Commission President Jean-Claude Juncker sends out the right message at the right time – and should be the starting point for additional efforts at national level. At the same time, it is imperative that, in time of limited budgets, we must let ourselves be guided by an inviolable principle: a clear definition of priorities and a wise selection of projects. In Germany, this is achieved by means of the Federal Transport Infrastructure Plan. It contains project proposals by the federal states which, on the basis of an up-to-date traffic forecast, are comprehensively appraised in terms of their benefit for the transport sector and the national economy. Next, the projects are classified according to different priority categories on the basis of the appraisal criteria. In the course of this, we act in concert with the European Commission and focus primarily on the busiest routes of national importance and the removal of bottlenecks.

With the change in investment and a clear definition of priorities, the ground for an efficient and close-meshed motorway network in Germany in the future has been prepared. Not only does this represent an important contribution towards growth, prosperity and jobs in our country, but it is also a fundamental factor for a thriving Europe. After all, more than 10,000 kilometres of Germany’s motorways and federal highways are part of the comprehensive TEN network, and

80 percent of the core German TEN network belongs to corridors. About one thing there can be no doubt: Europe is a joint project – and so is our infrastructure. If we are united in the clear commitment to make greater investment in our roads, and if we take responsibility for our infrastructure, Europe will remain the no. 1 mobility region and a guarantor of growth and prosperity.

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Motorways in the European Union: perspectives and evolutions

We need road freight without social dumping Magnus Heunicke Minister for Transport, Denmark

with, but also comprehensive enough to ensure proper checks and controls by the authorities. In particular, provisions and regulations on cabotage operations should be crystal clear and easy to enforce.

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reight transport is a key to our common European effort of boosting competitiveness, sustainable growth and the wider European economy. It is a pivotal point in building an efficient Single Market in which goods move unhindered by barriers to trade. Most importantly, it is a way of strengthening the close ties between our countries building on the mutual benefit of increased cross-border trade. We have several options when it comes to transporting goods within Europe and between it and the wider world: Rail, road, by sea and air. Each mode of transport has its own benefits, and each fulfill a demand in the market. It is our job to ensure that we have the best provisions and regulations for each mode of freight transport. Only then will we be able to take full advantage of the opportunities they offer.

This is not to say that I am opposed to cabotage operations, which allow for better use of freight capacity and thus more efficient road transport by enabling drivers to perform a national carriage of goods after the unloading of international transport operations. In this sense, cabotage enables us to make better use of existing resources, reducing the number of trips where no goods are carried and thus pollution. Nonetheless, the major inequalities in wages and working conditions of drivers within the EU create

strong incentives for a race to the bottom. That is, to social dumping. Evidently, this is a problem we must take action against. First of all, we need to further qualify the basis on which we discuss road haulage both in the Council and the European Parliament as well as with public and private stakeholders and partners. We need to ensure an informed discussion based on facts rather than presumptions. We need to provide the best possible information, including elaborate documentation and advanced statistics, on cabotage operations and the market for road haulage. At the same time, we must clarify the definition of cabotage operations. Clear rules and common standards can only follow from clear definitions, and only such will facilitate a sound basis for cabotage operations. Moreover, we need to make sure that the documentation required when performing cabotage operations is adequate. This would enable more efficient control measures, thus making it easier to separate the vast majority who comply with provisions and regulations from the ones who do not.

Thanks to our highly developed road infrastructure network, the market for road haulage is also highly developed. This is important. Freight by road is both a quick and efficient way of moving goods from one location to another. It makes good sense then to further develop the European infrastructure for road haulage.

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However, we are also facing challenges in the market for road haulage. We must ensure that competition takes place on a level playing field. We must take great care to ensure good working conditions for the drivers. Rules, provisions and regulations must be clear and easy to comply

The list above is not exhaustive, but contains in my view some of the most pressing actions we need to take in order to improve our common effort to develop and strengthen the road haulage market in Europe. Europe depends on efficient road freight services competing on a level playing field as a corner stone in the Single Market and as a model for fair competition and socially balanced policies against social dumping. Let us work closely together on this important matter.

“Should we support road freight transport on motorways?” Dan Ťok Czech Minister of Transport

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he Czech Republic bases the definition of its national strategic documents that resolve the given question on the relevant documents from the European Union. The Czech Republic’s basic strategic documents for the period of from 2014 to 2020 have been approved. With regard to this issue this is primarily the strategic document Transportation Policy of the Czech Republic 2014 – 2020 with its long-term view to the year 2050. In this document there is an effort to take a multimodal approach to transport. Even though the Czech Republic’s position in the middle of the EU leads to the erroneous assumption that it is a transit country, this transit is not the main encumbrance of the road network. The Czech Republic performs counts of cross-border freight traffic in regular intervals. The results show that pure transit traffic, which enters the Czech Republic at one border crossing and subsequently leaves the Czech Republic at another border crossing, is on the order of thousands of lorries per day at the maximum. The share of pure transit traffic is almost the same - low. International transit freight transport in the composition of the traffic flows on the main motorways does not represent more than a 25% share in the overall volume of fright traffic. It is apparent that the main loan on the road network is comprised of domestic transport or transport which has its origin or destination in the Czech Republic. Without direct subsidy support, when transporting LCL shipments (individual lorries or containers with a specific type of goods) road

freight transport is the definite choice for transport, de facto regardless of the distance, if the route is on land and if there is also a customer demand on speed. In this situation, however, each individual shipment requires its own rested driver. As the distances increase, the cost ineffectiveness of this transport mode also increases. Road freight transport is essentially not the optimum solution for large distances. Plus, with the coming upturn in the Czech Republic, Czech freight companies have run up against a lack of drivers that would be willing to do this work under the given conditions. The European trend is to ensure the higher use of rail transport for longer distances. At the beginning of the article I mentioned that the basic principle of the Czech Transportation Policy is to take a multimodal approach to transport. Though this word may still be enshrouded in mystery for many, it is nothing more than an attempt to convince freight companies and haulers to use and mutually combine the individual transport modes as efficiently as possible. The individual transport modes should not a priori compete with each other in the fight for customers, but should purposefully cooperate for the purpose of the optimisation of the flow of goods. In this respect this is a huge opportunity for rail transport to increase its volume of shipments if it will be able to offer its services in a form that will be acceptable for road freight transport companies.

just-in-time supplies to satisfy all of our needs, etc. Thus when looking at both sides of the coin, my answer to the question posed above is yes, we should support road freight transport, because we all need it. But we must, at the same time, specify limiting conditions on its operations so that freight transport does not encumber the network during peak traffic hours and on weekends, so that heavy freight traffic primarily uses the network of motorways and 1st grade roads, which are adapted for such traffic and so that it minimises the disruption to citizens living along frequented roads. The Czech Republic has long been striving for this regulation and the toll rates favour those freight companies that use a more environmentally-friendly fleet of vehicles – in the last five years alone that has led to a significant renewal of the vehicle fleets and today more than 60% of the actions in the toll system are for freight vehicles with a EURO V emission class. Since 2015 a new more beneficial rate has been in place for freight vehicles fulfilling EURO VI. Thus we must gradually eliminate the negative effects on the inhabitants through the construction of a superior road infrastructure, but that is a theme for another article.

If we arrive at the question that makes up the name of this article, being whether to support road freight transport, we must always look at both sides of the coin. One side tells us that freight transport is damaging – the wear and tear on the roads is one thousand times greater than for the transit of a personal automobile, the high degree of emissions and noise primarily on those sections of road that are not adapted for heavy freight traffic. The other side of the coin says the opposite – the relatively high income from tolls, the support of employment, the demands on

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I/ Promoting an efficient, safe and environmentally friendly mobility

Passenger cars per km of motorway - Comparison between EU 28 and other countries

Motorway network (km) Passenger Cars

EU-28 USA Japan China Russia

EU-28

USA

Japan

China

Russia

71.405,0

91.800,0

7.900,0

84.946,0

51.000,0

246343000

233841422

70263000

59890000

36917000

3449,94048 2547,292179 8894,050633 705,0361406 723,8627451

10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 EU-28

USA

Japan

China

Russia

Source EC

Road fatalities by age group in EU-28 and selected countries - 2013 (%)

Australia 28 EU Member States Israel Japan USA

0- 14

15-17

18-24

25-64

>64

4,3

3,3

15,5

53,8

23,1

2,8 8,3 1,9 3,5

3,0 1,4 1,9 3,2

16,5 24,2 7,0 17,2

55,3 45,8 36,8 59,3

21,6 18,1 52,5 16,6

60 50 Australia

40

28 EU Member States

30

Israel Japan

20

USA

10 0 0- 14

Source: IRTAD, CARE

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USA,Japan; 2012 figures

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15-17

18-24

25-64

>64

Competitiveness and sustainable development in highway projects: can they match? Michael Cramer MEP, Chairman of TRAN Commission

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ave you ever wondered why – if we believe musicians – it is a highway that leads to hell (AC/DC), but a stairway that goes to heaven (Led Zeppelin)? I don’t believe in hell – but I do think that the transport sector, and in particular road transport, are on the wrong course and could certainly do better. And maybe highways do not directly lead to hell, but certainly they contribute to climate change, empty public budgets and serious problems for health, life quality and congestion. Today transport accounts for 24% of all CO2 emissions in the EU. This is already bad – however, what is worse is that while other sectors have achieved significant reductions of emissions over the past decades, the transport sector has seen a sharp increase. Emissions in the industry have been reduced by 32%, in households by 24% and in the energy production by 16%. Over the same period, transport emissions have increased by 28%! This path cannot be sustainable. The development of the transport sector nullifies the efforts we have made – with billions of euros of our taxpayers – in other sectors. In transport, road is responsible for 72% of all CO2 emissions. An improvement of the transport sector`s performance can accordingly only work if we pay great attention to this mode. The first and most important step towards a more reasonable and sustainable approach for highways would be a right political framework in both, the Member States as well as the European Union. We need incentives which allow to focus rather on the entire life-cycle and to put preservation and maintenance of existing road infrastructure first, before starting insanely expensive

new projects. With a better preservation and recycling we can safeguard the environment but also save precious tax money. Unfortunately what we observe is exactly the opposite: As an effect of the financial and economic crisis, spendings on road maintenance in most EU - Member States have decreased by almost 30% between 2008 and 2011. And nowadays we have to deal with the fatal consequences, as too many important roads and bridges cannot be properly used anymore or are even completely closed. The costs of maintenance and repairing now exceed all public budgets. However, not only Member States, the European Union, too, has not done its homework. Many road construction and extension projects have been financed with money coming from European funds, even without sufficient demand for those projects or sufficient financial means from the Member States which would guarantee maintenance and preservation.. The new European Investment Package (EFSI) proposed by Juncker is currently running high risk to repeat all these mistakes instead of learning from them. The provision EU funds has to be more intelligent and follow quality, social and environmental standards. Moreover, private interests should not prevail upon social welfare – a simple principle often neglected by “Private-Public Partnerships”. However, the EU has also already proven that it can also do much better than it currently tends to do. Projects that offer inspiring results already exist: The Re-Road project for example is working on methods to enable the re-use of 99% of asphalt while minimising downgrading of the material. Another example is the project “SustainEuroRoad” which is developing an information technologies tool to optimise road construction works and reduce their environmental impact. The EU has to focus stronger on environmentally sensitive projects as those mentioned. And the distribution of cost must be fair: Any transport-expert will underline the importance of

the “user pays” and the “polluter pays” principle, however only 0.9% of the European roads are tolled today - whereas 100% of the rail network is. This unfair competition between transport sectors is one of the biggest obstacles in reducing polluting emissions in Europe. One might find it indeed ironic that European tax payers support those transport modes which cause them the most trouble - noise pollution, health problems, traffic jams, not to mention environmental issues. However, this nuisance is not a secret but seems to be politically intended, as especially eco-friendly transport is the most expensive one. Just to give an example: The emission of aircrafts in the stratosphere are in average four times more dangerous than emissions caused by traffic on the ground. Airlines, however, don’t pay kerosene tax and value added tax - these expenses are co-financed by customers of the eco-friendly railway and amount up to 30 billion Euros per year. We have to create an intelligent and sustainable maintenance and modernisation package for all transport modes. Supporting regional transport projects would have a much bigger job effect than building very few mega projects which would perhaps be finalised in twenty or thirty years (and this is an optimistic guess). We do have a road patrimony valued eight thousand billion Euros in Europe. So let’s keep an eye on maintaining, modernising and only when really necessary completing it.

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Driving the Road Safety Agenda Forward in Europe João AGUIAR MACHADO Director-General, DG Mobility and Transport, European Commission

traffic rules and infrastructure development and maintenance.

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he 2014 figures for road deaths in the EU have just been published – they provide much food for thought. Last year, 25,700 road deaths were reported by EU Member States. While this is 5,700 less than the fatality figure for 2010, it is not good enough to stay in line with the EU’s reduction target. More importantly, it means that too many people have lost loved ones on our roads, and every single day 70 people lose their lives. In addition, more than 200,000 people are reported to have sustained serious injuries in road traffic accidents. Following two years with a good reduction rate, the number of road fatalities in 2014 was only 1% lower than in 2013. The EU now needs to achieve an 8% reduction in fatal accidents annually, to reach the target of cutting road deaths by half for the period 2010-2020. The number of road deaths varies greatly across the EU. Sweden, the Netherlands and the UK have arrived at a low fatality rate, reporting less than 30 deaths per million inhabitants. These EU Member States are also the safest countries world-wide. Other Member States have some catching up to do. In particular Latvia, Bulgaria, Romania, Poland and Lithuania are of concern, with fatality rates above 80 dead per million inhabitants. Road safety is a shared responsibility, between the EU, governments, local authorities and road users themselves. To make our roads safer, we must all work together. Most of the everyday road safety work is done at local and national level. Member States are responsible for actions such as education campaigns, enforcement of

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The EU contributes with legislation and recommendations on certain issues, for example harmonisation of technical standards and minimum safety requirements for vehicles, infrastructure and road users. Right now, the Commission is working to update the EU rules for training and qualification of professional truck and bus drivers. The drivers of these heavy vehicles have a big responsibility for safety on the roads. Heavy goods vehicles (HGVs) are very safe for their drivers but in the case of a collision, the consequences are often grave for other road users. Collisions between HGVs and pedestrians or cyclists are especially serious and there is much more to do to increase the safety of HGVs in urban areas. The safety management rules for road infrastructure are also being reviewed. Motorways are the safest roads in the EU, in spite of the large traffic flows and the high speeds. A contributing factor is the EU-wide safety management principles, which is a way to make sure that tax-payer money is not spent on building unsafe roads. The principles also mean roads must be properly maintained to remain safe. This is an area where there is scope for further progress. While we focus a lot on fatal accidents, these are only the tip of the road safety iceberg. We must also consider the life-changing impacts of serious road traffic injuries. More analysis is needed to understand what are the most common accidents resulting in serious injury and how these accidents can be more efficiently prevented. For the first time, this year Member States will provide data on serious injuries, which will enable the EU to analyse the situation better and search for efficient ways to reduce this type of accident.

The Commission also works as a watchdog to monitor and encourage progress, by reporting every year on the latest road safety developments and the different achievements in different Member States. There is a friendly peer pressure among the Member States to contribute to the common EU target: halving the number of road deaths between 2010 and 2020. At a time of public spending cuts in many countries, there is huge temptation to cut the road safety budget, especially in maintenance and enforcement, but this is a false economy. Aside from the tragic human suffering, the economic costs of road traffic accidents are enormous. The World Health Organisation estimates that road crashes generate costs up to 1-2% of EU annual GDP, every year. This includes costs for health care, rehabilitation, social security, loss of work force and material damages. If we were to look at road safety purely from an economic point of view, it makes financial sense to invest in it. The 2014 report is disappointing but the 2020 road safety target remains achievable. The work ahead is challenging, be we cannot, and we will not give up. 25,700 lost lives on the roads is an appalling death toll. For most of the EU, the 2014 report is a wake-up call. It is a reminder that road safety requires never-ending efforts. All road safety partners need to step up their efforts for the coming years. Member States who achieved a high level of safety should help their neighbours sharing advice and successful strategies. Member States who suffer high levels of road fatalities need to look critically at what can be done. The European Commission will continue its efforts to make the every EU country as safe as those with the best records. Road safety is everyone’s responsibility, and we need to make sure it remains a priority. We need to redouble our efforts – because every death is one too many.

Safety on the highways: a technological perspective Dominique Riquet MEP, Vice-Chairman of TRAN Commission

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s European policy-makers, we have always put road safety high on our agenda and it is very encouraging to see that the number of fatalities keeps decreasing. In 2013, there were 26 000 road fatalities in Europe, which is 8% less than in 2012. This effort should however be pursued in line with the Commission’s objective of reducing the number of road deaths by half between 2011 and 2020. In this context, highways can boast a better performance as they are usually much safer than the rest of the road network. Nevertheless, they call for a specific action, given their significant development on the EU territory (motorways have reached almost 80 000 km, a length which is twice as much as what we had in 1990) and taking into account their particularities compared to conventional roads. Indeed, accidents there have the potential to be much more serious because of a higher average speed and a greater presence of (mega)trucks. This increases the risk that car will pile up and accidents will involve death or major injuries. Recent technology developments could play a key role in supporting the political objective of increasing safety on highways. Whether it concerns infrastructures or vehicles, innovation can help both preventing accidents or, when an accident occurs, reduce its impact. As regards vehicles, it is quite clear that we have entered into the era of “connected cars”. The first improvement this represents relates to the driver’s information. Whether there is an accident further up on the motorway, works or fog, car users now have the means to be alerted a lot more in advance than before, be it by radio or by navigation systems on board. In this respect,

the way we will exploit data made available by Galileo which is to become operational soon will make a big difference. Vehicle speed is also one of the key parameters on road, as it can influence the ability to stop on time in case of an obstacle and determine the seriousness of an impact. New devices and design can contribute to regulate speed and car equipment with such devices should therefore be as broad as possible. In this respect, AEBS (advances emergency braking system), LDWS (lane departure warning system) will be mandatory for new trucks and buses as from 2015. Also, the European Parliament just approved new standards for trucks on cabin design and vehicle aerodynamics. ISA (intelligent speed assistance), EDR (event data recorder), SLD (speed limitation devices) and new generation tyres are other examples of what technology can offer in relation to vehicle safety. Finally, after an accident has occurred it is possible to limit the consequences both for the people involved and for other road users. It is good news that new cars will have to be equipped as of 2018 by eCall, an automatic emergency call system in case of an accident, which will contribute to reduce the number of fatal accidents by making assistance quicker and more effective. When it comes to infrastructures, action can be taken through the TEN-T guidelines, to which motorways sometimes belong to. The degree of safety, citizens can enjoy on such infrastructure is indeed highly dependent on several aspects which have to be addressed during the building phase: presence of security barriers adapted to motorcyclists, number of lanes, frequency of stopping places, presence of communication means and highways’ route or design have become key points. By 2019, more than 1300 kms of main road tunnels will have been upgraded to meet the highest safety standards. As we can see, it is important the legislator keeps up-to-date with the latest innovations so that they can be promoted through the regulatory framework when feasible. Indeed, such

technology has a cost, especially when it comes to research. And regarding commercialisation, public support can hardly be granted if the technology is not fully operational. In any case, establishing tax incentives, binding objectives and granting funds for research are a few examples of how we can push these improvements and attract investment while respecting the principle of technology neutrality. Citizens’ should be able to benefit from the best available technologies when driving. However technology cannot do everything and enhancing both our vehicles and our infrastructure should not divert us from another equally important area of action when it comes to road safety: drivers’ behaviour. On this matter, Member States still have the lead and the EU has got only little competence. By the way, one must not forget that too much technology in the vehicle can also disturb drivers and reduce their attention! Furthermore, given its very nature, road still remains more dangerous than other transport modes, both for freight and passengers, whatever technology we put in it. Besides the fact that it will help reduce CO2 emissions (as oil will probably remain the main fuel for some more time), I therefore believe that the modal shift towards rail or inland waterways - and in urban areas to public transport or cycling - should be more systematically encouraged for journeys of a same distance than those currently made by road.

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Motorway concessions: a resilient model for new mobility patterns Pierre Coppey VINCI Deputy CEO in charge of Concessions

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he concession model has proved resilient to develop and maintain the European motorway network, and has constituted a fertile ground to always innovate and offer better and tailored services to motorway users, as their expectations evolve generation after generation. VINCI Concessions warmly welcomes the European Union‘s threefold ambition: a vision for transports in Europe which does not deny the part roads represent, a decisive action to tackle the investment gap in Europe, and the ongoing search for better and clearer market conditions.

Concessions are by essence a public - private partnership and in that regard should serve as a platform to implement the Juncker Plan to boost investment in the European Union. Concessions are also long-term contracts involving private operators engaging huge investments which naturally require – in order to be as beneficial for all parties as they should be – a stable regulatory and legal framework with harmonized administrative conditions at the European Union level.

at the European level, concessions have also demonstrated their capacity to absorb economic downturns, in particular the oil crisis in the 1970s and the financial crisis which started in 2007. Even under difficult economic conditions and in a context of reduced public investment capacity, motorway concessions have ensured continuity of the transportation services, preserved the national assets as resources, were uncompromisingly dedicated to maintenance, and have improved the safety and the sustainability of the infrastructure. The inner concessions contracts’philosophy – long term engagement, involvement in the design, construction and operation, and performance-based contracts – encourages the optimization of investment costs vs. operation and maintenance costs. It also drives performance and innovation to attract more clients. Motorway concessions now have more than 45 years of existence and their capacity to deliver the highest level of service has remained

Concessions financed and built an extensive transport network with an excellent service level, ensuring safety, environmental respect and great care for evolving users’ expectations The concession model allowed developing the European motorway network, and in particular the French network, at an unprecedented pace. Between 1970 and 1995, 5,500 km of motorways have been constructed in France representing on average 220 km per year. In addition to being a fantastic tool to grow the motorway network and enhance free movement and international trade

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Photothèque VINCI Autoroutes – Erwann Le Gars

uncontested, as certified by the European Road Assessment Programme (EuroRAP). The search for the highest quality of motorways is a shared goal among users, decision-makers and private partners such as VINCI Concessions as there is a direct link between quality and road safety. Properly designed, built and efficiently maintained motorways is a key element to enhance road safety, and further to contribute to economic growth for Europe, even during most difficult economic periods. Concessions allow public authorities to construct and upgrade their infrastructure with the financial support of private partners in a constrained budget environment. As a major player in motorway concessions, we commit ourselves to deliver the highest level of service to our clients and in particular: safety for users and adaptability to the new mobility pattern. The VINCI Autoroutes Foundation for Responsible Driving invests more than 2 million Euros every year to support scientific research

Photothèque VINCI Autoroutes – William Daniels

car-sharing services at least twice a month obtain discounts on their toll subscription. This initiative brings savings on travel costs, fuel and tolls, and contributes to a more eco-responsible driving behaviour. The Radio VINCI Autoroutes also works together with Waze, the Google GPS-based, participatory, geographical navigation app’, to improve the quality of news broadcast on air to its 2,2 million clients, on travel times, location of accidents and hazards.

Photothèque VINCI Autoroutes – William Daniels

to grow our understanding of risky driving behaviours on motorways such as somnolence, use of speed regulators, use of mobile phone will driving, and to conduct information campaigns on road safety. In partnership with IPSOS, the Foundation has conducted in 2015 and for the fifth time a European barometer for responsible driving with the objective to analyse differences in drivers’ behaviour. The 2015 edition includes 10 European countries, with more than 10,000 persons polled, with a large media coverage. A website Roulons-Autrement.com has been created with the Ferdinand Association to serve as a participatory multimedia platform aimed at raising awareness of road safety among the general public. But motorways are more than just transport infrastructure. VINCI Concessions has developed

the conviction that motorways are also laboratories for innovations. VINCI is indeed driven by innovation to adapt to the changing expectations of road users and new mobility patterns. In addition, VINCI is a pioneer in developing public transportation on the motorway concessions. A first example is the Briis-Sous-Forge “motorway station” in the southwest of Paris, which features a landscaped car park where drivers can leave their car and board on a public bus which runs on dedicated lanes along the VINCI A10 motorway. Furthermore, VINCI and Blablacar have associated to promote the development of car-pooling activities. Nineteen secure car-sharing car parks have been created on the VINCI motorway network, representing 1,500 places. Besides, the subscribers of VINCI “télépéage” who use the Blablacar

New mobility services and usage can be created on motorways. With that conviction in mind, we created at the end of 2013 the VINCI Autoroutes Lab to facilitate the emergence of new services. Its mission is to support innovative projects by helping them in the transition from idea to full-scale demonstrator on the motorway network. VINCI Autoroutes Lab anticipates customers’ expectations and identifies promising innovative services. But when it comes to innovation, our greatest proudness is to achieve impressive and unprecedented engineering works to bring to life motorways, and to address the highest social and environmental expectations. The Rion-Antirion bridge in Greece, the 2,880m fully suspended cable-stayed bridge crossing the Gulf of Corinth near Patras, and a seismic fault, is an outstanding demonstration of what can be reached in terms of technical prowess and innovation under a concession scheme. Similarly, for the A86 Duplex Tunnel west of Paris, VINCI has been able to develop an innovative double-deck tunnel solution and endorse all the related design, construction and traffic risks. The concession scheme has permitted to give life in 2011 to this long awaited project, whose preparation process started in the 1970s. The A89 motorway in France is the best example of how structuring the dialogue with

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I/ Promoting an efficient, safe and environmentally friendly mobility local authorities and citizens before well ahead of the construction can determine its timely realization and its acceptance by future users. A thorough consultation process involving local environmental associations has been carried out to jointly identify the best available areas for compensation measures, the monitoring of these measures, the temporary transfers of fauna and flora for conservation purposes, communication and public outreach activities. Without these technical, social and environmental achievements, to which should also be added the development of new financing tools such as project bonds, those highly challenging yet most needed - motorway projects would have not become reality. Therefore, VINCI Concessions calls for an appropriate and effective set of guidelines to select, promote and implement structuring infrastructure projects, especially under the concessions’ scheme.

Concessions are the best candidates for the Juncker Plan and it should be made easier to mix EU funds and Juncker Plan’s instruments The European Commission identified the bridging of the financing gap as a key policy challenge. Indeed, the need for infrastructure financing in Europe is substantial and estimated to be around a trillion Euro by 2020. The European Fund for Strategic Investments (EFSI, or Juncker Plan) called for the mobilisation of up to 300 billion Euros in additional to public and private investment in the real economy over the next three years to stimulate investment in infrastructure. In this context, VINCI Concessions highlights that what large infrastructures projects lack to be delivered in Europe, is above all access to European grants and availability of public subsidies. Private investors have equity to invest, and loan money is also available on the market, but public resources allocated for grants are scarce. This is especially true for motorways since this sector has limited access to EU grants as motorways are only eligible for cross-border sections under the Connect Europe Facility. In a fiscally constrained environment in Europe, encouraging private participation in transport investment is certainly a key component of the solution to accelerate investment.

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VINCI Concessions would therefore expect the Juncker Plan, in its objective to join public and private forces, to shed light on public private partnerships as they permit to optimize the use of available funds through leverage and are fit for complex projects such as large infrastructure projects. For concession projects, which are one of the PPP contractual forms where revenue depends on revenues collected from tolls, VINCI would expect the scope of the Juncker Plan’s instruments to allow traffic risk projects to be delivered under project finance schemes, including in Member States where sovereign risk is perceived as above average. For partnership contracts, which do not feature traffic risk, VINCI would call for renewed conditions to use EU structural and cohesion funds in order to bridge the financing gap for economically beneficial projects. Among the most significant projects at preparation stage in Europe, the following ones would be particularly relevant for European growth and connectivity: and would represent a total value of approximately 6 billion Euros: • Poland, A1 & A18 Motorways • Romania, Comarnic Brasov Motorway • Greece, Salamina Island Undersea Tunnel • Czech Republic, R4 & R7 Motorways • Slovakia, D4/R7 Motorway • Belgium, Walloon Region, Road equipment modernization on the Walloon network. Motorways have the potential to make use of innovative financial instruments. This is not by chance if the only two transport projects chosen for the pilot phase of project bonds, were motorway projects. In Europe, the motorway projects featuring high level of traffic - and which could hence be suitable for a concession scheme and be financed following the “user-pay” principle - are difficult to prepare nowadays and are not implemented most of the time. The combination of the Juncker Plan’s instruments and the EU structural and cohesion funds should be instrumental for those projects to be properly structured and to eventually materialize.

Concessions require a stable and predictable legal and regulatory environment, harmonized at the EU level to ensure technical and administrative interoperability

Thanks to its capacity to integrate its know-how as investor, builder, operator and service provider, VINCI Concessions is particularly well placed to meet the challenge of bringing infrastructure projects to life. European Institutions play a decisive role to encourage private operators to get involved in infrastructure projects under public – private partnerships. We expect them to contribute to the success of such long-term schemes, which can run for 50 years, by proving legal and regulatory stability. This is essential for concession-holders operating major infrastructure projects without public funding. Indeed, stability and predictability will enable those operators, through the application of appropriate charging rules guaranteed in the long term, to obtain the huge financing they need to build and maintain the infrastructure, recover their costs, reimburse their debt, and secure a sufficient return on their investment. It is of paramount importance for private operators, which invest their money in infrastructure projects and assume construction and operating risks (and sometimes traffic risk), that initial conditions and agreements be respected over the duration of the concession. As tolling systems already exist in most of the European countries and transit being international by nature – and not strictly European or limited to the Schengen Area - motorway operators would benefit from clarified legal conditions to pursue fraudulent users which have not been compliant with tolls on the European motorways, and even once they have exited Europe. The revision of the Directive 2011/76/EU “Eurovignette” should be the occasion to strengthen the European legislation on toll pricing and compliance and to push for a reform of the international legislation accordingly. Furthermore, administrative barriers are sometimes a challenge that could be addressed by European Institutions, as they critically hinder the development of a unified, interconnected and intermodal network in Europe. We acknowledge that the Directive 2014/23/UE already contains dispositions which promote a more efficient legal and regulatory framework to administrate and amend concession contracts. The treatment of public – private partnerships in Member States’ fiscal accounts can for instance constitute another administrative hindrance to private investment in public projects.

Clarifying EUROSTAT procedures and rules, and addressing all potential inconsistencies with the Stability and Growth Pact, could increase predictability and enable Member States to accelerate the project preparation and tendering phase. Similarly, allowing an early involvement of private investors in the project preparation phase can be instrumental to develop a sound and efficient project structure, which will attract many bidders and financing entities. In particular, procurement procedures should allow for a professional market sounding prior to any call for tender and a competitive dialogue at proposal stage.

VINCI, an industrial private partner To meet increasing needs for infrastructure, VINCI works with public authorities to develop long-term projects, including the design, financing, construction and operation of infrastructure and facilities. As a global player in concessions and construction, VINCI employs nearly 191,000 people in some hundred countries. VINCI Autoroutes is Europe’s leading motorway operator. We design, build, finance and operate a 4,386 km network of motorways, including 4,368 km in service under long-term concessions in France. We welcome more than two million customers every day and we have 2.2 million electronic toll subscribers on the networks of our 4 concession operating companies– ASF, Cofiroute, Escota and Arcour.

To conclude, “how mobility should be financed” is the key question for today and for the future. The “user-pay” principle or the concession scheme is a rather new idea in Europe, and can be a solution for the future for two reasons. First, in several countries with established transport networks, the greatest issue is the renewal of ageing infrastructure. PPP and concession schemes are valuable tools to enhance and modernize existing roads, as public authorities find difficult to mobilize credits to maintain motorways. Secondly, there is no intrinsic reason to limit the concession principle to long distance road sections: we should also focus on how concessions could be implemented for urban mobility, co-modality and the development of collective transports on road. Combining EU funds and the Juncker Plan’s financial instruments for motorway projects will push the implementation of the “user–pay” principle, allowing Member States to keep resources for other transport modes and to implement these projects with limited use of public debt.

Photothèque VINCI Autoroutes Pascal Le Doaré

A89 Violay- Balbigny Outside France, VINCI  Highways manages about 20 crossing concessions, including motorways, suburban expressways, road maintenance, bridges and tunnels. We operate in more than 10 countries. We cover the design, financing, program management, operation and maintenance phases of infrastructure projects. Our Concessions division, more specifically, operates more than 5,000 kilometers of roads, 23 airports around the world, several stadiums and high-speed railway lines, such as the High Speed Line Sud Europe Atlantique, a 8 billion project which is currently under construction in France and will link Paris to Bordeaux by 2017 in a travel time of 2 hours.

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Positioning Europe as a global decisive actor in innovation and sustainability: the role of road infrastructure José Díez Director of Institutional Relations (European Union Road Federation)

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e are living a crucial momentum for the European project. Seven years have passed since the most important financial downturn in our recent history happened. The crisis has had a global impact, with the necessity to change and adapt the political priorities of the European Union to face new challenges with a main objective: recovery. One of the key society pillars able to reactive other sectors, and hence, to boost economic growth and job creation, is the road infrastructure. Roads play an essential role thanks to their ramifications, covering practically all the areas and establishing a unique link between other modes of transport. However, while it is clear that road network has been able to provide huge socio-economic benefits for Europe and its citizens before the crisis, the road sector has a unique opportunity in the coming years. It can be able to modernize and transform itself specially by minimising its environmental impact while being at the core of a smarter and more sustainable economy. Decarbonisation is indeed a main priority for all the actors involved in road transport. It represents an enormous challenge on which road industry has been working during the last years by developing solutions from research centers, automotive companies, infrastructure industry, universities, logistics, etc. In this sense, the industry will not be able to achieve Europe 2020 targets just by itself, despite the huge amount of funds invested and the promising results already achieved. An institutional support is indeed required for the sector to accomplish our tasks efficiently and then achieve those environmental targets. The constructive cooperation and dialogue between governments and private stakeholders is composed basically of two key commitments

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from both sides: innovation in sustainability from the industry and better public procurement from the Public Administration. During last years, the road infrastructure industry has focused its research priorities on the development of innovative methodologies, materials or better asset management strategies. Benefits have been very clear for example in the reduction of CO2 emissions and energy consumption, the use of natural resources or by facilitating the deployment of alternative fuels. A first step has been made by the EU with co-funding research initiatives such as DURABROADS or LCE4ROADS from the 7TH Framework Programme (current Horizon 2020). Both Projects focus on improving our roads by promoting new technologies, innovation or sustainability and also by establishing for the first time a cooperation between the European Commission and the Federal Highways Administration of the United States. The DURABROADS Project’s main goal is to design and develop cost-effective, eco-friendly and optimized long-life roads, more adapted to freight corridors and climate change by means of innovative designs. The main feature of the project is the use of nanotechnology and new materials able to resist adverse effects of climate change on the infrastructure and high freight corridor traffic loads. In parallel, the LCE4ROADS Project arises from the necessity to create a EU-harmonised holistic and innovative certification methodology integrating Life Cycle Engineering (LCE) concepts for materials used in road pavements of future and existing infrastructure. The new certificate will then cover the environmental, technical and socio-economic performance. These projects are in line with the Europe 2020 Strategy and the White Paper on Transport, where the European Commission aims at moving towards at cleaner, more efficient and more sustainable transport. The ambitious strategy will promote competitiveness in the transport sector resulting in economic growth and creation of qualified jobs. While providing positive input to the EU and its citizens, our companies will be able to develop technological know-how, be more

competitive and tap into new markets outside Europe. The formula sounds simple but there are many obstacles. Our companies are global leaders in the road infrastructure sector enjoying hegemony in many other countries since many years. However, this favorable situation could be under risk especially with the appearance of new potent competitors from emerging economies like China. Under these circumstances, the new Public Procurement Directives, which are going to be implemented in all member states by first semester of 2016, can represent a g reat support to the industry. In fact, Public Administrations are by far the largest purchaser of road products and infrastructures. However, current public procurement legislation is proved to be a barrier for the uptake of innovative solutions. The new EU rules, on the contrary, provide a positive step forward. With the objective of supporting the uptake of green and more innovative solutions, the new regulatory framework aims at providing road authorities with a context that moves away from the principle of the ‘cheapest price’ and encourages the evaluations of tenders based on cost-effectiveness approach. Consequently, the future EU strategy can act as an enabler for the acceptance of more costeffective solutions based on innovation and second, will provide industry players with more incentives for the development of new and more sustainable products based on innovation, thus extending our global leadership. For theory to be put into practice, however, challenging results demand permanent coordination between public authorities at EU, national and particularly at regional level. In this situation, the supportive role of the industry will be also crucial as it will reflect a real market picture. Hence, the constructive dialogue with the private sector will bring a real cooperation for the development of knowledge, share successful practices and identification of future challenges. The effectiveness of this public-private partnership will then be the key element for positioning Europe in the global arena not as a simple spectator but as a decisive actor.

Despite improvements, the number of deaths on Europe’s roads remains ’intolerable’ Ines Ayala Sender MEP, Member of Committee on Transport and Tourism

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n the context of road safety, in spite of the major advances of EU policy in the objective of reducing the number of fatalities by more than 50 per cent over the last decade, there still remains much scope for improvement. The frightening figure of 28,100 deaths on EU roads in 2013 is still intolerable and demands that we, as legislators, continue combating it with all the resources at our disposal, and more. Initially, and despite the commission considering it too ambitious an objective, we in the parliament decided to maintain the commitment to halve the number of road victims by 2020. Nevertheless, we are aware that with the persisting crisis and its socioeconomic consequences, urban growth and major demographic aspects place new challenges before us, as well as the need to boost the momentum of EU road safety policy. “Parliament has always considered guaranteeing road safety as far as is possible to be a political priority” Worryingly, despite a continuous reduction since 2000, a slight upturn has been observed in the number of victims in general and in certain countries. There is an ageing population which claims the right to continue driving, an increase of cyclists and motorcyclists in urban traffic, ageing vehicles, dramatic cuts in road upkeep and maintenance expenditure due to the economic crisis, lack of sufficient financing for infrastructure and for innovation to improve road safety. We cannot abandon important areas like investment in infrastructure, in training and in R&D. Good design and correct maintenance of our roads, as well as research and investment to develop safer vehicles and new smart

technologies to help drivers, who also need to be made aware, to adapt and to undergo new training, are key in this respect. Therefore, it is time for Europe to leave behind the current policy of reckless cuts which also increases the number of traffic victims, and for the commission’s new investment plan to provide for resources to improve road safety. In this respect, we in parliament already include the road safety objective in the connecting Europe facility, the programme of investment in trans-European transport networks, with a planned budget of more than €30bn by 2020. The Horizon 2020 programme will also be decisive in its support for innovation applied in road safety matters. Just one note of caution regarding the extraordinary advances in smart technologies in which we place so much hope, from the new speed control and braking devices, driving assistance and alarm systems, alcoholocks, eCall systems, as they alone will not resolve non-human factor accidents. These advances must be complemented by policies concerning behaviour and an improvement in the application and effective control of regulations. “It is time for Europe to leave behind the current policy of reckless cuts which also increases the number of traffic victims” Within the context of implementation of regulations and behaviour, fortunately there have also been advances here. In 2011 the EU finally managed to adopt the cross-border road traffic offences directive demanded by the associations of relatives of accident victims. This closes an existing legal loophole and authorises traffic authorities to request the details of the owner of a vehicle with a foreign registration caught in a major road safety offence, with the aim of being able to notify them in their own language of the offence committed which is subject to punishment. Since it came into force in 2013, and despite the fact that the legal basis agreed with the council for getting it off the ground limited its scope, this new legal instrument has already

shown its potential, with reductions in the number of offences by foreign drivers being observed. That suggests, then, a major deterrent for foreign drivers, who today are aware that any offence committed abroad can be notified to them. In spite of such a promising start, the court of justice, at the request of the commission, considered that the appropriate legal basis for this directive was the one which originally both the commission and parliament had recognised and which was modified at the request of the council. Despite declaring it null and void, the court in its wisdom and prudence has allowed the legislator to correct and adopt a new text in accordance with the legal basis of transport safety. As such, we are faced with a new proposal currently going through parliament with the objective of being able to adopt it as soon as possible with no more changes than those required by the ruling. Both parliament and council have as our objective the reaching of an agreement under the Italian presidency to avoid the risk of legal loopholes and to be able to continue applying such a beneficial instrument. Parliament has always considered guaranteeing road safety as far as is possible to be a political priority. Citizens, who do not usually like receiving notice of a traffic offence, nevertheless approve of the fact that all Europeans, regardless of the registration of their vehicle, are treated as equals. We are working hard, not just on the prompt adoption of this text which will improve the application of the regulations for all Europeans, but on a proposal for their revision so that in 2016 we might be able to improve the system. At the same time, we are working so that Europe may adopt a sufficiently ambitious investment plan to place road safety high on the agenda, to exercise our current commitment with ‘vision zero’, which obliges us not only to achieve safer roads, but to create and launch new instruments to avoid having to weep for more victims. That is our commitment.

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I/ Promoting an efficient, safe and environmentally friendly mobility

Environmental and safe transport: challenges and a success story for SIAS motorways Paolo Pierantoni SIAS motorways group1 - Chief Executive Officer

and built with a state-of-the-art process of design, construction and operation. Nevertheless all what is made today to achieve “the best” possible, most probably tomorrow shall be something around the “acceptable”.

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his section of “European files” magazine is played keeping high the flag of a mobility to be called “efficient, safe and sustainable”. Well, I deem we need to clearly state it since the beginning: the subject addressed is not a something out of current affairs, but it is a “limit concept” indeed. It is a challenging target that all of us are aiming at, but it shall never be fully reached. It is something like the horizon: when you move to reach it, it is not anymore there. This is the reason why I put in my title the concept of “challenge” ... but I put into the same title even the concept of “success story”, because this challenge is one that we are willing to accept, one we are unable to postpone and one for which we already have little success stories to be written here. Recently, the transport Commissioner Violeta Bulc declared road safety to be a true “European success story” and everybody can agree on that. SIAS group is proud to have given a tiny, but fair contribution to the overall European success and we are still working and struggling to hopefully be able to give a further contribution to the target of protecting human life. In the following, I shall speak of challenges and efforts so far undertaken towards an efficient and sustainable transport system, and finally I shall close with an overview of activities and results towards a safe transport system.

The change of judgment is not a consequence of a wrong design or, even worst, of a wrong definition of National and European standards. The World itself is changing in fact: time is passing and the human society has changing needs and motorway operators are demanded to face them. Let me explain the idea through an example, out of the environmental protection field. Some European motorways were built, maybe in the sixties, and the issue of a sustainable level of noise was not taken into account at all in the design and construction phases. In those specific cases that I have in my mind, motorways were passing through completely unsettled lands, then environmental noise was not a real issue to be tackled. Time passing, the choices of local authorities took new settlements in the range of motorways, the traffic grew and nowadays noise is clearly an issue: motorway operators are consequently facing this new societal need implementing kilometers and kilometers of noise barriers and assuming other mitigating measures.

SIAS is a key European player operating 1.400  km of motorways rich of traffic in the northern part of Italy. When building a motorway, such an infrastructure is (obviously) conceived

On the other hand, changes could happen even on those priorities that are in the political agenda of the Country. I think everybody can agree on the fact that European society is more and more keen and devoted to the protection of the environment, while maybe only a couple or three decades ago, most European countries could have the “boosting of the Economy” as a top priority. Who knows what priorities shall be in the future agenda of Europe, after a crisis that demonstrated to be so stressful for most European Member States?

1 SIAS motorways group includes motorways serving the following regions: Piedmont, Lombardy, Liguria, Emilia, Tuscany, Aosta Valley - www.grupposias.it

Previous examples shows the changing nature of societal needs, all needs that are continuously calling the road operator to action. Nowadays

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SIAS group is trying to face a challenge of this kind, in order to make the network more efficient, more environmentally integrated and safer. Societal needs are calling SIAS motorway operators to action. Of course, this kind of endeavor cannot bulky rely on State budget or on the increasing of toll rates: a higher efficiency through integration of different motorways into a single organization could be, today, an interesting tool to meet societal needs. Traffic safety is a key element for the sustainability of any transport system and it is a traditional pinpoint to identify and describe role and activities of motorway operators. SIAS operators keep road safety as a touchable reality in daily activities of each and every staff member. In fact, SIAS staff is daily committed to guarantee traffic surveillance, emergency measures for the protection of vehicles stuck on the road, to guarantee the activation of controlcommand chains for the management of traffic and emergencies. The availability of operational resources is the backbone for an action of this kind but, even more important is the high qualification of the staff. In the field of training, SIAS staff can claim to have reached a few best practices to be accounted both at national and European level. For instance: joint training with authorities and staff members of emergency services, fullscale exercises for emergency management and even a cooperation with medical authorities for sampling to the monitoring of psychophysical status of road users. By the way, in my previous text I just discussed about road “operation” only, while SIAS strategy holds on even to the prevention. The technical departments of SIAS operators are supported by the engineering corporations, the building firms and high technology corporations in order to develop a number of actions aiming

at the prevention and at improving the infrastructures themselves: inspection of works, design, conservative maintenance, improvement of facilities and their equipment, technology deployment and needed extension of the network. Roads need to be properly constructed and efficiently maintained to guarantee the safety of the traffic: this is the daily commitment of SIAS motorways Group, we already said. Unfortunately, having roads constructed and well operated is not enough to guarantee an absolute road safety. Breakdown of vehicles, the environment (light, rain, fog, snow, wind, etc.) is always ready to put drivers in troubles. But human factor is the key important one. Human factor which means miscalculation, distraction, dozy driving, imprudence, drunk-driving and so on. Aiming at contributing to the development of our society, we have conceived TRIP2LIFE campaign trusting men (Autostradafacendo is the Italian name): we are confident that better informed users shall assume upstanding behaviors into practice, promoting road safety for themselves and the others. Hundreds of initiatives in the field of road education were already achieved today. So many are the signs of acknowledgement so far received by this specific activity, aiming at a widespread diffusion of the safety culture. Today, 40 among public and private organizations have endorsed the campaign, now performed under the aegis both of national and international authorities. A memorandum of understanding was signed together with the Traffic Police whose staff is diffusing, on a national scale, the results of our work, as part of their own project. Moreover, SIAS activities are mentioned in the report for “midterm review of the United Nations Decade of Action for Road Safety” (2011–2020).

story” that SIAS group can claim for: thanks to the improvement of infrastructure, equipment and operations, SIAS group has managed to build and consolidate a motorway network able to guarantee a better protection for human life, in view of a more efficient and sustainable transport service. Over SIAS network, the target of halving road fatalities was not achieved in 2010, but it was already reached in the period between 2008 and 2009, two years before the deadline proposed to the Member States by European Institutions. Moreover, the 2010 final balance was particularly favorable (... if we can use a word of this kind for road safety statistics). In fact, the final result accounted for less than a third of the 2001 fatalities: a net reduction of 67.5% in the decade was achieved. A result even more interesting when compared to the national average improvement (43%), or even when compared to the European average, stuck around a reduction of 44%. Nearest years allowed us to collected also some historical results (for our history ... of course): the achievement of “zero” dead on the road for a full year on motorway A10 (Autostrada dei Fiori) and again “zero” dead on the A4 - Turin - Milan (operated by SATAP). This difference registered between the improvement achieved on the SIAS network and the equivalent value accounted over other networks shows that preventive actions to improve the safety of the SIAS infrastructure have been suitable to support and boost a general improvement concerning vehicles and user behavior. Once performed all those tasks, you know, the “horizon” of SIAS operators moved forward, and we need to take action again, hoping tomorrow to have something more to write here.

For the most recent years, figures for the traffic safety on SIAS infrastructures improved a lot, we can consider this one as a small “success

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II/ Implementing a proper European road network

Connected Vehicles - the Road to More Capacity Magda Kopczynska Directorate-General for Mobility and Transport (DG MOVE) European Commission

Dear readers, Nowadays digitalisation impacts many aspects of our lives. Transport, like many other sectors, could not remain unaffected of this e-volution, if not a revolution, that will lead to experiencing our mobility differently. The market forces have demonstrated to be very dynamic and innovative in the field of intelligent transport systems. This is being supported by Open Data policies in some Member States and easy access mechanisms defined by the Commission together with the Member States for sharing traffic and road data, including road safety information. All this contributes to create new business opportunities and new services for customers as well as promoting more sustainable transport behaviours. Connected mobility is one of the core activities on which DG MOVE is currently working. Digitalisation of transport will also be addressed by the Commission in the wider context of the forthcoming Digital Single Market Strategy which is scheduled for adoption on 6 May. Cooperative Intelligent Transport Systems (C-ITS) are communication technologies that enable different parts of the road transport network to share information. They allow vehicles to become connected to each other, to the road transport infrastructure and to other road users. C-ITS can potentially serve a variety of purposes. Depending on the nature of the applications (like for instance information supply, awareness, assistance, warning or even potential driver over-ride to avoid an accident), C-ITS can contribute to improving road safety, reducing

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congestion, optimising the performance and available capacity of existing road transport infrastructure, enhancing vehicle fleet management, increasing travel time reliability and reducing energy use and negative environmental impact.

whole value chain. It is also expected to identify the most likely and suitable C-ITS deployment scenario(s) and the geographical environments where C-ITS is considered to be most beneficial in relation to the services that it can provide.

Despite potential benefits being huge and the strong interest from public authorities, these technologies have not yet reached the point of a breakthrough. Technology is mature and ready for deployment. However, like often when innovation is at stake, we are still facing the common chicken and egg problem.

On the basis of this work, the Commission will present a Master Plan for C-ITS deployment across the EU by mid-2016. Without common efforts, we see a big risk of fragmentation in the EU with a potential expansion of proprietary systems.

It is true that large scale pilot projects are flourishing in the Member States and that the industry seems ready to cross the bridge. But there is still uncertainty as to how deployment could take place and how interoperability could be achieved. This is a situation where Europe can act as facilitator: to help building a shared vision for the C-ITS deployment across the Europe. The C-ITS Platform that the Commission established in November last year - as the concrete tool to build this shared vision - brings together of a wide variety of relevant stakeholders, including Member States, vehicle manufacturers, Tier-1 suppliers, aftermarket services, telecommunications industries, insurance, service providers, road operators and representatives of the motorcycle industry. In this context, we are discussing issues that could delay deployment: how to guarantee data security and avoid misuse, how to ensure privacy and data protection, how to build public acceptance and confidence in these technologies. We are also addressing interoperability issues and are trying to find ways and solutions to make sure that, for example, when vehicles cross borders they do not suddenly lose the benefits of C-ITS because of technological problems. The platform is expected to release a report by the end of 2015, on how to ensure interoperability of C-ITS across borders and along the

Japan and the US are ahead of the EU with clear deployment strategies established or about to be established through legislation. There is thus also a strong industrial dimension that calls for a coordinated approach in Europe. EU funding has already been made available to ITS and C-ITS through Horizon 2020, TEN-T and the Connecting Europe Facility. Also national and private funds have been supporting C-ITS pilot projects. In any case, the challenges are huge. A major one is to collect, manage and handle huge volumes of digitalised data from transport in a fair and non-discriminatory way while protecting data privacy. This creates challenges in terms of data interoperability, data ownership, data use, data transmission, data security, etc. But by merging our interests into a shared vision we can overcome the obstacles. As part of the European Commission’s European Energy Union, C-ITS will contribute to decreasing energy consumption. It will also provide increased safety and better use of existing road capacity. Transport users will enjoy new of better services, and the private sector will benefit from being able to offer new services and from an improved competitive position of the European industry. We can, no doubt, face the challenges and overcome them if we pull our act together.

Developments in road and vehicles Michael Møller Nielsen General Delegate, IRU

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t is all well and good and all too easy for those of us working in the transport sector to focus on the here and now, to be dealing with the daily problems and issues that arise. But we must also have a view to the future, an idea of where the European transport system should be in say 10 or 20 or 30 years time, if we are to be effective in the work we launch today. So what sort of road infrastructure can we expect or would we like to see and what sort of vehicles performing what sort of operations would run on this future European infrastructure system? Well, first we have to talk about the basics. That means safe and secure rest areas for drivers at regular intervals, that means a completed core network of roads, border crossing points, and multimodal terminals, to name just some of the necessary but basic requirements. The IRU has worked with developed and developing countries alike to make this a reality through our Model Highway Initiative and have facilitated access to information of where to park securely via our TRANSPark smartphone application. The reality today is unfortunately still that too many of these elements are missing especially in regards to missing road transport links, ensuring efficient border crossings and terminals that guarantee smooth interaction between modes not to mention allowing more efficient road transport vehicle combinations to operate where possible and feasible. These challenges must be rapidly addressed if we are to move forward to the future transport system we want to see – safe, secure, clean, efficient, and meeting the needs of business and citizens.

As technology advances the possibilities for much greater interaction between infrastructure and vehicle increases and the two should be seen as part of an integrated transport system. It cannot be the right approach for the future to view these two vital, mutually dependent components separately. We must think much more holistically. And this holistic approach has to include propulsion methods too and ensuring the necessary distribution points across Europe. The road transport industry is not wedded to using oil based fuels. There are a number of possible alternatives, some more viable than others. One of the big possibilities for the future is the use of electric vehicles and I am not just referring to battery based technology. Something not even discussed today is the great potential for overhead electrification of key road corridors, operated by hybrid truck, buses and coaches in terms of carbon reduction, fuel savings, and other environmental benefits. It also has the potential to fit well with other technologies, such as platooning that could significantly add to transport efficiency.

technological developments are just the tip of what is going to be possible in 20 years time. It is not so hard to imagine road infrastructure that warns drivers of dangerous driving conditions such as ice or wet road surfaces. Or what about infrastructure that aids safety by helping to spotlight vulnerable road users at night? For many of these ideas to come to fruition it will need the collaboration of public bodies and business. It will need an end to the modal silo mentalities of today and where close cooperation across modes is the exception rather than the norm . It will need incentives for a coordinated technology uptake at both vehicle and infrastructure level. It will need proper, strategic, testing and clarifications of issues such as liability and secure access to data. It will need money. But above all it will need passion, commitment, new ways of thinking and a strong desire to drive ideas forward. The future for the transport sector is bright and clean. Let’s start the work for tomorrow, today – the IRU certaintly is prepared to engage.

Already today we are hearing about and seeing the results from the development of driverless or autonomous vehicles. Already the technology exists to dramatically improve the efficiency of Europe’s road transport system. Intelligent Transport Systems (ITS) are demonstrable and essential elements for future transport used already today in multiple applications. The Compass4D project for example is rolling out technology that allow vehicles to communicate with traffic lights and other systems that will grant priority to certain vehicle types – ambulances, public transport vehicles including taxis, or trucks operating on agreed routes – and advise drivers of hazards ahead. These deployments will bring significant developments on a number of fronts – reducing congestion, improving traffic flows in certain areas, reducing CO2 emissions and fuel consumption. But these

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II/ Implementing a proper European road network

Interoperability of transports in the European Union Pavel Svoboda MEP, Chair of Committee on Legal Affairs (JURI)

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that they correspond to the interfaces between the business entities that together operate the service: the toll charger, the toll service provider and the service user. The failure to implement the EETS within the foreseen timescale is not down to technical reasons. There are a number of possible explanations for the above mentioned delays of the EETS. It is suggested that one problem is that the European legislation defines only a framework for the EETS. It has also been suggested that the EETS is not commercially interesting. There is also the difficult task of aligning the various political agendas, contractual obligations that guarantee a number of toll chargers monopolies over their local concessions, and matters such as service levels, liability and cross-border enforcement. Otherwise, the biggest obstacle is the requirement that any newly established EETS provider has to be fully operational in all

© MACQUARIE MOTORWAY GROUP

here are approximately 72 000 kilometres of charged roads in the EU, of which 60% are equipped with electronic toll systems and 40% are covered by vignette systems. For some time now, the European Union has been trying to make travelling across borders as hassle-free as possible. Across the European Union, different road charging systems are being operated by professional companies making use of state-of-the-art technologies. The current road charging systems are successful, but a public standard is missing for interoperable road charging solutions that work seamlessly anywhere in Europe. The requirement of interoperability between these different road charging systems comes from several concerned parties. The European Commission has identified interoperability between different road charging systems as a prerequisite for improving mobility within Europe. Therefore, the Commission put forward a legislative proposal concerning which became the EFC Directive (”Directive 2004/52/ EC of the European Parliament and of the Council of 29 April 2004 on the interoperability of electronic road toll systems in the Community”). The definition of the European Electronic Toll Service and its technical elements was further detailed by the European Commission in its Decision 2009/750/EC. Directive 2004/52/EC lays down the conditions for the interoperability of EFC systems in the European Union. The EFC Directive is the first step towards the EETS, promoting the principle of “ONE VEHICLE, ONE CONTRACT, ONE ON-BOARD UNIT” for valid payments across all European road charging systems.

By October 2012, Member States had the obligation to make EETS available for vehicles exceeding 3.5 tonnes and coaches (Article 3(4) of Directive 2004/52/EC). Progress to this date has been disappointing. As far as interoperability is concerned, the EU has convened an interoperability committee, and significant efforts are being expended to develop an EU-wide interoperable process. European efforts towards such interoperability could enable the market to evolve towards more functionality, lower risk and lower costs of road charging solutions. One of the major outstanding European issues is the implementation of the EETS. In the EETS architecture, two charging principles for a tolled infrastructure are supported: DSRC-based tolled infrastructure or GNSS enabled tolled infrastructure. The architecture defines the technical detail of the interfaces for road charging systems that are interoperable in such a manner

© AISCAT

28 Member States within 24 months. It seems more likely that future providers will need to enhance their incomes through other valueadded services, such as remote diagnostics or fleet management solutions. These facts show us that to become an EETS provider requires taking a great economic risk. The legislation should therefore be amended so that the rights of EETS providers are better defined and protected, and their obligations made less burdensome. The legislation should relax the requirement for EETS providers to ensure the coverage of all toll domains in the EU within 24 months. In order to avoid the financial and contractual risk of EETS providers, it is necessary to remunerate the EETS providers for the toll collection services they provide to the toll chargers, as well as for the fact of sharing with them the risks related to possible financial evasion. Another important step is harmonising the technological solution used for electronic tolling in the different toll domains. It is important to revise the legislation on EETS because it is one of the pre-conditions for the integration of different Intelligent Transportation Systems (ITS) equipment installed in the vehicles.

While European interoperability based on the EETS has not been fully implemented yet, some examples of bilateral interoperability are already in place. In compliance with, and in support of, existing EU legislation on the interoperability of electronic road tolls, the proposed action (REETS TEN) aims to deploy EETS-compliant services in a cross-border regional project. The project aims to implement EETS in Austria, Germany, France, Italy, Spain, Denmark, Poland and Switzerland. The regional EETS approach strategy aims to start the ball rolling and to have something operational. Hence, there are still many questions over technical specifications, business models and even demand for interoperable toll systems, particularly when it comes to a pan-European solution such as EETS. However, the internal market for road transport services is not fully completed. The new road package will contribute to several of the priorities of President Juncker. The main priorities include the completion of the internal market for road transport services and a fully operational and interoperable European electronic tolling service. The latter will also contribute to the priority of a

Connected Digital Single Market. Furthermore, the full implementation of the user and polluter pays principle in road pricing will increase energy efficiency and the environmental performance of road transport. The need for electronic toll interoperability grows ever more pressing as the EU tries to accommodate the steadily increasing international truck traffic through the better integration of its transport networks. The European Electronic Toll Service is an ambitious plan to bring all of Europe under the umbrella of one on-board device. EETS usefulness for the development of European transport is evident and therefore the implementation of EETS should not be questioned because of its technical complexity or a necessity to find a way of financing the EETS. EETS is also a significant part of an effort to achieve a single transport market and therefore deserves close attention from the EU.

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Optimizing the European road network Kallistratos Dionelis
 Secretary General, ASECAP

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hen in my early times I had to write papers, my key question was whether I should follow a pompous but superficial ambiguity or a laconic, but deep and -perhaps dangerous- clarity. My experience has finally proved that, in the long run, clarity always pays. So here it is my text regarding the “Optimizing the European road network”. Transport is an extremely complex system that depends, affects and is affected by multiple, fast changing, social, economic, political and environmental factors. While adapting to the changing global economic and societal phenomena, transport itself is also a driver of change, as innovation in the sector opens new frontiers. The term in fashion is “multimodal green transport”. However owing to this complexity, any intervention in the transport field must be well prepared and must be based on a long-term vision as policies of structural character take long to implement. In this “multimodality oriented regime” all modes and mainly the road sector must maintain and further develop without barriers their proper roles as the sustainable mobility remains always the objective and the main characteristic of a free society. However, shifting the balance between modes of transport must not be imposed by “artificial political instructions” but be the choice of a sustainable socio-economic and well-functioning market forces where competition/cooperation among the transport modes is safeguarded and

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promoted. Each mode of transport has its own characteristics, its own comparative advantage and its internal structures. If there is a growing imbalance between modes of transport in Europe the solution is not to punish the healthy sectors, but, instead, to examine the EU failure to exploit the full potential of the other modes. Road Infrastructure, the backbone of a multimodal transport, is not manna from heaven, mainly in periods of scarcity. Road Infrastructure is an asset, well designed by the public authorities, well financed by efficient public-private partnerships, well managed by the infrastructure managers. On EU roads vehicles circulate, drivers drive, information is provided.

Transport is judged by the quality of its infrastructure services to the citizens and by its cost that are always borne by the society and the users. We live in the era of “intelligent sustainability”. Everything we plan must be green and smart, otherwise will be ignored by the big “bibles of visions”. Policymakers are intelligent, Industry is intelligent, vehicles are intelligent, citizens are intelligent. With such a high speed and intensity of “change” however, they all face high levels of uncertainty in decision making as they are lost in their isolated decision making rooms. The result of this chaotic lack of cooperation among intelligent actors is called “stupidity”. Strong efforts are urgently needed to put things in motion, to leave behind a naïve transport and move towards an intelligent transport. We have to be prudent and I dare to state that managing simultaneously economic, technological, political “change” is a hard issue, is an art, not a science. Visions are always needed to move ahead. But big, unclear phrases and taboo slogans are not visions as real visions must be always accompanied by well evaluated matrixes of phased, planned achievements. Visions are to be judged not by how important they appear a priori but evaluating a posteriori the facts, i.e. the actions, the costs and the benefits of the achieved results. Big phrases are coined by the politicians for the front pages of the big papers: “Global transformational change is a characteristic of our age”, Ministers, Commissioners, Parliamentarians, state in their various declarations. They all keep calling for more international high level co-operation to “create transport systems answering to the needs of a changing world”. No-one objects. But then, going back home, no one really understands “which is this changing

public and private spheres must come together and agree on a future plan that will be based on the given reality and the foreseen socioeconomic and political scenario 15 – 20 years after. All players must be prudent and use terms commonly understood and commonly evaluated. I read a recent interview of the previous Transport Commissioner S. Kallas to Euroactive. Answering to the question how could EU encourage more private investments in the transport sector, he answered: “When I began my term as Commissioner in 2010, I asked the same question to the world’s largest investment banks for their views. They told me that there is no shortage of private money, that money is abundantly available for investment projects provided that the conditions are suitable and that the private investors expect regulators not to be politically motivated or micromanaging the activities of private enterprises”. Mr. Kallas now teaches international economics in the University of Tartu in Estonia.

He said simple and clear things that it seems he already knew as Commissioner in his 5 years of leadership. However he did not have time to apply them; so he now teaches what he should have done in the era of his power. As I said, transport in itself is always defining new landscapes of opportunity for a greener, more intelligent, socio-economic reality. But to this end this complex sector needs strong coordinating structures and daring politicians. The policy makers must not be afraid to talk with the industry. In order to build a fair, transparent regulatory framework and work with consistency, stability and predictability over very long periods both sides need to establish a regime of trust. Unfortunately, there is a thorn of democratic inefficiency as the decision makers change every 4-5 years putting at the risk of uncertainty previous plans, visions, agreements and deals.

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world”, “how fast it changes and to which direction it moves”, “which are the proper needs” and finally “which are these common answers”. The impact of megatrends like demographic change, digitalization, urbanization, shifting trade flows and climate change, is not empty words but a complex matrix that must be thoroughly measured by experts and then agreed politically by all. To this end the two parts of the transport market, public and private, must sit together and talk aiming at a long term prudent partnership The title of my pamphlet is “Optimizing the European road network”. Road infrastructure is not deciding here and now, drawing lines on a piece of paper as road maps; what will happen tomorrow and how we will optimize EU’s road network is much more difficult and demanding. Building, maintaining, upgrading and managing Road Infrastructure takes risky decades to carry on; it is not drawing maps in paper and presenting pilot schemes. Road infrastructure is a complex long term matrix where the various players in the

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Regional European Electronic Toll Service (REETS): Getting it going Hubert Resch Director of ASFINAG

EETS compliant services as a transit to a market of interoperable toll services. Nine months after the start of this 2nd phase, here is an interim personal evaluation of the progress.

Further REETS Toll Domains are opening

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stablishing a European Electronic Toll Service (EETS) according to the directive 2004/52/EC, and more precisely described in the Decision of the European Commission 2009/750/EC (the “EETS-Decision”), is the proposed solution of the European Union to achieve interoperability of electronic tolling systems across the Member States. As provided by the EETS-Decision, EETS should have been available for heavy goods vehicles in October 2012, and for private cars in October 2014. Clearly, both deadlines were missed. For me, one clear lesson for European policy is that you cannot establish a market just by providing soft goals in the law. Intended economic deregulation requires (strict) legal regulation, at least in the phase of transit to market. In that respect the regulatory framework for EETS has been insufficient; it did not go far enough, left out important parts (as recommended by major stakeholders) and was completely utopic, in particular with regard to the assessment of the business environment, concerning the time line for the roll-out of the EETS, and the request for pan-European coverage in 24 months counting from the registration of a Provider. As a consequence of the failure of EETS, the project Regional European Electronic Toll Service (REETS) was set up on the initiative of the Commission. The REETS project brought together prospective EETS Providers and the Toll Chargers (Associations) of Austria, Denmark, France, Germany, Italy, Poland, Switzerland and Spain. The REETS initiative aims to implement cross-border tolling services in a regional project thereby kick-starting the evolution of EETS. After successfully completing the “Analysis Phase”, REETS, in its 2nd phase focuses on the setting-up and coordination of pilot operations of

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In addition to the French and Spanish Toll Domains, which are already open for service providers which are independent from the toll chargers, further toll domains are opening. The project recognises concrete steps forward to implementation and pilot operations for REETS Service Providers, for example in Austria, Denmark, Germany, Italy and Poland.

Operating Service Providers are driving the implementation It is obvious and natural that the implementation is driven by those Service Providers which are already in operation in more than one Toll Domain due to their already existing experience, operating systems and customers. These are for example the accredited Service Providers in TIS-PL (France/Spain) or EasyGO (Denmark, Norway, Sweden and Austria).

Facing Reality It is the right time, but it takes some time REETS implementation schedules in each Toll Domain indicate that pilot operations can start in 2015, first services will in operation in 2016. All in all, proper implementation per Toll Domain with 3 or more Service Providers takes around 2 years with limited capacity to implement more toll domains in parallel. (Comment: This proves how unrealistic the EETS Decision is which requires an EETS Provider to cover all Europe in 24 months.)

Lessons learnt As a learning from 10 years EETS legislation and the REETS project amendments of the regulatory framework are certainly necessary: Issues to be addressed are: • Requirement of pan European Coverage: Is the legal requirement that one EETSProvider covers all European Toll Domains with its own service and equipment useful?

If we stick to the market approach let the market and the customer decide. • Fair remuneration: Mostly due to sometimes long-term contracts some Toll Chargers deny a similar compensation as they pay to incumbent operators for the same service, as this would mean additional costs, at least on short term. In a common market this is clearly not acceptable. • Realistic time horizon: A realistic time horizon for e.g. the requirement to provide just one On-Board-Unit would be around 5 years plus. • Forget EETS for private cars: The time horizon for „European“ solutions for private cars is 15 years ahead and solutions and technology will be different at that point in time (probably no separate Tag). Even more important is, that currently there is no need or demand for EETS for private cars.

EETS: the harder but the better way As a final conclusion, I am convinced that the market approach of the EETS Decision is the hard way, but it is the right way. It is important to mention that EETS is not only about interoperability, but and at least equally important, also about the opening/deregulation of the (national) markets for toll services. Other solutions for interoperability of tolling systems around the globe seem more to focus to provide interoperability by a centralized approach established by toll charger cooperation. It is obvious that such solutions are easier and faster to implement than following a decentralized market approach as provided by the EETS Decision. But I think that such centralized solutions will tend to create regional monopolies.

So, EETS is certainly not the easier way forward, but on medium term and the long run it is the better solution. Besides providing interoperable services, EETS will lead to greater competition in both technologies and service provision, and will ultimately reduce costs of the service and provide a better service to the customer.

Density of motorways: Comparison between EU 28 and other countries - 2011 (km motorway per 100 sq.km land area)

Motorway network (thousand km) Motorway network (km) Land area (1000km2) Land area (100km2)

EU-28 USA Japan China Russia

EU-28

USA

Japan

China

Russia

71,4

91,8

7,9

84,9

51,0

71.405,0

91.800,0

7.900,0

84.946,0

51.000,0

4.413,6

9.629,1

377,9

9.597,0

17.075,0

44.136,1

96.290,9

3.779,4

95.969,6

170.750,0

1,617835913 0,953361018 2,090256758 0,885134459 0,298682284

2,5 2 1,5 1 0,5

Source: EC, IRF 0 EU-28

USA

Japan

China

Russia

European Investment Bank Loans for Transport Provided Within the European Union 2006-2012 (EUR million)

Roads, Motorways Railway Urban Transport Air Transport Maritime Transport

Intermodal Freight Terminals and Other

Total Transport Sector

2006 4.384 2.999 1.294 764 593

2007 3.542 3.534 1.924 644 454

2.008 4.932 2.495 1.981 2.458 894

2009

2010

2011

2012

2013

2014

6.030 2.704 3.399 1.740 1.821

3716 4352 4151 487 496

3876 4624 4411 500 793

2726 3541 2655 261 863

4728 3419 2733 420 212

5384 3875 2865 428 368

36

29

763

n.a.

2

66

28

125

45

10.070

10.127

13.523

15.694

13.204

14.270

10.074

11637

12965

Source: EIB

The European Files

31

III/ Financing the evolutions of highway infrastructures in Europe

Financing the evolutions of highway infrastructures in Europe Wim van de Camp Member of the European Parliament, EPP Group., Coordinator Transport Committee

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n this calendar year the European Parliament and the European Commission discuss the mid-term review of the European Whitebook on Transport of 2011. How is the implementation going of the Whitebook: which goals are reached, which goals are not and which goals need adjustment because of, for example, farreaching technical developments like ITS? Looking at the current discussion in Brussels on the construction, usage and maintenance of our highways we see six tendencies. The emphasis on the construction of roads will focus on the major cross-border roads. The so-called TEN-T corridors are the heart of the policies. There will be less room for individual, single, and regional projects, which are not directly linked to the corridors. This means that the Member States themselves have to deal with specific national bottlenecks. For several years a second tendency has been emerging: the user-pays principle. The users of highways will be further charged for using the highways. Not only for specific facilities like tunnels, mountain passes and bridges but more and more for longer distances. Because of the financial crisis national governments have less possibilities to invest and charging users has become a popular instrument in European governance. This is inextricably linked with a third tendency: the polluter-pays principle. Even though the transport sector has become cleaner in the last ten years - especially lorries have become

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cleaner - the transport sector remains a considerable polluting sector. This aspect remains a serious challenge for the sector. An increasingly critical public and a Climate Summit in Paris on the way forces the transport sector to defend themselves with technical progress and a mixed ´door-to-door´ transport planning against a very professional sustainability lobby. This seamlessly fits into the fourth development: the continuing shaping of European transport policy towards the ongoing modal shift. Not in the rigid, imperious sense but in more modern concepts of co-modality and multimodality. The goals of the Whitebook on Transport of 2011 are by far not reached. However, the European elite wants to continue with this concept. More political guidance is necessary because the railway sector and de inland waterway sector have been unable to substantially increase their share in European transport. Major investments are essential to speed up the large scale developments, which are needed to reach these modern concepts of multimodality. Here, I see a bunch of possibilities. Because of the before mentioned user-pays principle, private investors are more interested to invest in large infrastructure projects. The return on investments in other sectors has decreased in the last couple of years. For example, the interest-rates in the EU have been very low. Therefore, with the Juncker Investment Plan - the European Fund for Strategic Investments (EFSI) - the Commission tries to attract more private capital for the transport sector and especially for road transport. The return on investments for road transport is expected to be higher than in the railway sector or the inland waterway sector. It might not be the nicest challenge for the sector, but it is the reality in 2015. The European Investment Bank, responsible for the implementation of EFSI, is a phenomenal player in this field. They have good experiences with large investments in road

transport. When EFSI is going to play a major role in investments in infrastructure for road transport (by providing ´loans´), the EU itself might play a bigger role in investments in infrastructure in the railway and inland waterways sector. In relation to the necessary investments it is important that the EU works on better prioritising the Structural and Cohesion funds. Even though the use of funds significantly improved the last years - by focussing more on innovation instead of classical regional expenses - more professional assessment of projects and on the allocation of funds is necessary. The funds still have an old-fashioned reputation with national governments and the public that they invest in irrelevant regional projects. Furthermore, the classical Structure and Cohesion Funds can play a bigger role in financing projects in the `comprehensive network´ of the TEN-T corridors. Finally, a sixth tendency is emerging the last couple of years, which is a threat to the European transport sector as whole. Partly due to the economic crisis of the last decennium, the maintenance of the European infrastructure has lagged behind. I have no exact figures on this, but if you travel on the German highway you feel the wear of the road surface! Not only in Germany, but also in Central and Southern Europe there is a lack of maintenance. Therefore it is necessary that investments not only prioritize in new roads but also in maintenance. In that sense we can learn a lot of the serious consequences of neglecting transport infrastructure for several decennia in the United States. Also in repairing our roads the Structure and Cohesion Funds can play an important additional role.

“Connecting Europe from West to East, from North to South: Cohesion Policy invests in road transport” Walter Deffaa Director-General, Regional and Urban Policy, European Commission

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he transport sector represents a key area for growth and competitiveness, in particular through servicing the other sectors of the economy. Therefore efficient and sustainable transport infrastructure is vital to exploiting the economic strengths of all EU regions and supporting the internal market, thereby facilitating economic and social cohesion. In the medium and long term, reduction of bottlenecks in transport infrastructure contributes to sustainable economic growth by increasing levels of accessibility and cohesion between places, thus facilitating trade activity and creation of new business, residences and other development activities. Strategic investments in transport, including motorways, have been traditionally supported by both the Cohesion Fund and by the European Regional Development Fund. Most Member States face the common challenge of financing investment in transport infrastructure, (including motorways) exacerbated by tight budget constraints, and of creating a network that better integrate and connects the different transport modes. In such an economic and financial context, the setting of priorities needs to be more selective and reflect a consensus among key stakeholders in the region/Member State. In the current programming period 2014-2020 cohesion policy will co-finance motorways investments in the framework of a specific investment priority included in the legislative package adopted in December 2013 : “supporting a multimodal Single European Transport Area by investing in the Trans-European transport Networks (TEN-T)”. The identified investments in motorways should be prioritised according to their expected economic development impact, and in particular according to their contribution to mobility, sustainability, reduced greenhouse gas emissions, and the Single European Transport Area.

Maximising the network effect of transport investments and in particular in motorways, requires that individual investments should be carried out in full consistency with comprehensive plans in order to ensure a better interoperable integration between transport modes and a stronger focus towards the Trans-European Networks by 2020 and beyond. Investments by the European Regional Development Fund and Cohesion Fund in transport infrastructure and in particular in motorways should be fully in line with the TEN-T Guidelines adopted at EU level in December 2013, which define the EU’s transport infrastructure priorities. These comprehensive plans should be based on a rigorous assessment of transport demand (both for passengers and for freight), should identify missing links, and bottlenecks and should set out a realistic and mature pipeline for projects envisaged for support from European Funds. A major bottleneck source is the lack of coordination across borders. Member States should therefore adopt common approaches and identify joint operations in the framework of the transnational territorial Cooperation programmes, and especially in the context of the macro-regional strategies such as the EU Danube Strategy and the EU Baltic Strategy. In order to ensure coordinated approaches in financial support at EU level, it is crucial to ensure synergies with the projects to be co-funded by the Connecting Europe Facility. In some lagging regions the complexity of such infrastructure investments, including motorways, requires an additional effort relating to institutional and administrative capacities for the implementation. Measures to avoid, mitigate or compensate for negative impacts of transport infrastructure on the environment can be supported by the ERDF and Cohesion Fund. Moreover, as many regions suffer from a high level of congestion, cohesion policy intends to support more Intelligent Transport Systems for Road Traffic (ITS), although we are fully aware that the issue of road congestion has to be tackled in a more holistic way through a more balanced development and better integration of the different transport modes.

In Member States/regions with comparatively good endowment of infrastructure, investments in motorways to be supported by Cohesion Policy should be focused in addressing specific missing links or bottlenecks in order to ensure the maximum European added value. In terms of enhancing the quality of existing infrastructure, the focus for all Member States should be new or upgraded transport infrastructure and services. A medium to long-term financial planning, including a national maintenance plan should ensure the long-term conservation of the motorways networks and the sustainability of cohesion policy investments. All Member States need to ensure that existing infrastructure is properly preserved and used. This means that appropriate financial resources need be made available for the successful implementation of these maintenance plans for motorways. We all understand that public budgets are under strain – but maintaining key transport infrastructure in good shape today must be a priority if we want to avoid additional cost and burden tomorrow. Trakiya Motorway in Bulgaria can be considered as a good example of Cohesion Policy co-financing. The project concerns the construction of 115.18 km of motorway, completing the connection between the capital city Sofia and the port of Burgas as a part of Trans European Network Transport Corridor VIII between Albania and Macedonia to the Bulgarian ports on the Black Sea. Besides making road transport in the southeastern part of Bulgaria faster, safer and more efficient, it will divert traffic away from many towns and villages that are currently suffering from noise and air pollution and unsafe traffic situations. I invite you to consult some other good project examples in the public data base INFOREGIO: http://ec.europa.eu/regional_policy/index.cfm/en/ projects/ EU Cohesion Policy offers definitely many opportunities for supporting a comprehensive motorways network in Europe. Investments will be more focused than in the past in order to offer a better value for money. At the starting point of the new 2014-20 programming period, with the support of Member states and regions we are on the right track.

The European Files

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III/ Financing the evolutions of highway infrastructures in Europe

Financing Motorway PPPs in Europe Guy Chetrit European PPP Expertise Centre (EPEC), EIB Advisory Services

E

urope has a long tradition of major motorway projects implemented through publicprivate partnership (PPP) arrangements. Such PPP schemes are either user-pay (i.e. concessions under which the end-users pay for using the infrastructure) or governmentpay (e.g. the public sector contracting authority remunerates the private partner based on the availability of the infrastructure and/or its usage - so-called “shadow tolls”). According to EPEC data, over the last 10 years, almost 140 PPP contracts have been entered into in the EU and Turkey for the building, major refurbishment, upgrading, capacity-expansion or telematicsequipping of motorway infrastructure. Motorway PPPs are in fact a significant segment of the European PPP market: over the last decade, they have represented about a third of the total private financing market for PPPs. User-pay motorway PPPs are particularly common in countries such as Spain, Greece, Portugal, Italy and France (where the toll culture is well anchored amongst users), whereas government-pay motorway PPPs tend to be relied upon in northern Europe (e.g. the UK, the Netherlands). Since the onset of the financial crisis in 2007-2008 and the subsequent double hit inflicted by the global economic downturn and the sovereign crisis, the market for motorway PPPs has faced numerous challenges. In particular: • A shift from user-pay to government-pay schemes: Over the last few years, a drop in the number and value of toll road PPP projects has been observed and more use has been made of government-pay schemes. In 2014, nine of the 10 motorway

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PPP projects closed were availabilitypayment based. Interestingly, the reasons for governments to resort to user-toll schemes appear to be largely opportunistic: they are seen as a way to implement projects with no direct budgetary impact. Opting for government-pay PPP schemes, on the other hand, is often imposed upon public decisionmakers (e.g. countries where there is a strong opposition to toll charging) and gives rise to better ex ante investment appraisal; • Highly visible failures: A number of toll road projects have failed over the last few years in Europe (e.g. Spain, Portugal, Greece and Ireland). The fundamental reasons for such failures vary greatly but the economic downturn and over-optimistic traffic or cost projections have proven to be key factors; and • Raising finance: Financing toll motorway PPPs has become more difficult, as is discussed below. The above observations highlight an important paradox for public decision-makers: although toll road projects are proving more difficult to finance, the fiscal pressure that most EU countries face incentivises governments to opt for such schemes. Turning to the financing question, the pre-crisis era was one during which commercial banks were uncontested reference lenders. However, with the crisis, the traditional PPP lenders started to feel uncomfortable with lending to “greenfield” (i.e. new infrastructure or infrastructure improvements with no track record of cash flows) toll road projects on a long-term basis, mainly for the following reasons: • Traffic risk is often perceived as excessive, for example because growth forecasts are too aggressive or because of competing infrastructure. The optimism bias that has been found to underpin demand forecasts in transport projects is now widely recognised;

• The regulatory environment (e.g. tariffsetting mechanisms, changes in safety requirements) is considered to be unduly unstable in some places; • There are often significant uncertainties regarding the cost of implementing and operating road projects (e.g. expropriation costs, extraordinary maintenance requirements); and • The financing structure of projects is often overly aggressive (e.g. equity capital is insufficient). Clearly, the historical performance of toll motorway projects in Europe has not helped to build lenders’ confidence. But setting the above arguments aside, commercial banks have also faced constraints of their own, limiting their ability to lend to PPP projects on a long-term basis (e.g. the Basel III regulation). Against this background, a significant and possibly structural change has taken place over the last two years with regard to the sources of long-term finance for PPP projects: the emergence of institutional investors (e.g. pension funds, insurance companies) as a new class of lenders. In 2014, almost a third of the European PPP market debt was provided directly or indirectly by institutional investors. This raises the question of whether these “new lenders” can help the financing of motorway PPPs (in particular toll PPPs). So far, institutional investors have shown an appetite for very long-term lending opportunities, potentially involving some construction risk. The two motorway PPP transactions signed in Belgium and Germany in 2014 that involved the EIB-European Commission’s Project Bond Credit Enhancement instrument are good evidence of this appetite and of the benefits brought by institutional investors. However, at least for the time being, most institutional investors have a stated focus on:

• Availability-pay schemes rather than user-pay concessions; • Large projects in countries with a proven track record in PPPs and low perceived political/regulatory risks (typically northwestern European countries); and • Achieving a balanced portfolio of loans that mixes “greenfield” and “brownfield” assets (i.e. PPPs with existing cash flows from operation). Going forward, it is likely that lenders, whether of the old or the new type, will be more demanding than in the past when lending to motorway PPPs. In particular, their focus will be on matters such as: • Ensuring that projects operate within a clear, predictable, stable and protective regulatory environment; • Where PPPs feature a transfer of traffic risk to the private partner, seeking revenue, traffic or financial guarantees from governments; • PPP contracts featuring generous compensation provisions in the event of early termination; and/or • Extensive financial and performance support from the private sponsors involved in the project (e.g. performance bonds, completion guarantees). The above suggests that the PPP motorway sector is being offered a major opportunity to diversify and deepen its financing sources. However, seizing this opportunity may entail a number of adjustments to public policy. In order to ensure that the potential of PPPs, as an efficient and bankable tool for the delivery of motorway infrastructure and innovation, is fully unleashed, governments across the EU may need to take action to improve, amongst other things: • The coherency and transparency of project pipelines; • Project selection and project preparation to ensure investments make strong economic sense and represent value for money.

Greenfield motorway PPP projects in Europe country breakdown (aggregate over 2005-2014)

Spain Portugal Greece United Kingdom Italy France Poland Germany User-pay motorway projects

Netherlands Hungary

Government-pay motorway projects

Belgium Slovakia Austria Finland Denmark 0

2

4

6

8

10

EUR billion

In this respect, it is worth stressing that there is increasing use of innovation in road transport (e.g. hard shoulder running dynamic traffic guidance) and that the need to plan over the long term to accommodate these developments may particularly suit PPP structures; • The basis on which the PPP option is chosen (for example, recognising that PPPs often entail public sector liabilities towards the private partners of a contingent nature); and • The procurement process of PPPs to ensure in particular that competition amongst lenders is maximised. Better regulation and better legal/institutional frameworks will go a long way to improve the quality of motorway projects and ensure that PPP arrangements are used where they are best able to be financed and deliver value.

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12

III/ Financing the evolutions of highway infrastructures in Europe

Concession model: a key tool for financing and operating road infrastructures in Europe Bruno de la Fuente Director of Concessions- SEOPAN

T

o foster economic growth and to improve mobility and safety, the European road network still requires important investments for its completion and to guarantee its proper maintenance. In the last years we have seen how public budgets have been systematically cut due to the economic crisis and the spending constraints foreseen by the Stability and Growth Pact. Consequently, required investments have been frozen, postponed or directly abandoned. The rhythm of public investment we had in the pass will hardly be recovered in the next future and additional sources of financing have to be promoted to face new projects or to continue

and improve the existing ones. This idea has also been recognized in the Juncker´s plan announced by the European Commission where a public contribution of 21 billion euros (from the European Investment Bank and the European Commission) should attract up to 315 billons euros, mostly from private investors. Even though concessions are not a new instrument to finance and manage road infrastructures, their particularities and advantages turn them in a key tool for the success of future road and infrastructure projects. In a road concession scheme, a specialized operator is in charge of financing, building, maintaining and operating the road. He will be compensated directly by the grantor administration (availability systems, shadow tolls….) or by the users (tolls). Among all the concession models, toll concession is recognized as the “purest” one: the infrastructure is not paid with public funds -which now can be allocated for other priority area (e.g. education, health…)- but by the users,

and the amount invested has no impact on the public deficit. In addition, it allows the transfer of risks to dedicated counterparts -mainly those related to construction costs and traffic demand-, it implies high quality maintenance of the road during the whole concession period thanks to the earmarking of toll revenues and thus, these roads register the best records in road safety, it allows relevant fiscal return to the general budget of States through taxes... Concessions suppose a win-win solution where public and private interests converge based on a mutual thrust. Private investors are asked to place huge amounts of money for the construction of the road and the start-up phases that they will recover gradually during a long operational phase (see figure 1). This implies that not all roads can be financed through toll concessions: the model requires a constant cash-flow only guaranteed by an adequate a continuous traffic level which is not always the case.

Source: PWC

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It is an appropriate moment to attract private investments thanks to the existing excess of liquidity in the markets. For this, it is fundamental to implement automatic mechanisms to reach concession contract rebalances to avoid long legal processes. With regard to the road infrastructure charging policy initiatives in Europe, the efforts to be made by the European and national policy makers should be aimed at promoting the user pays and polluter pays principles and sustainable forms of road infrastructures financing. In addition, under certain circumstances (e.g changing of the economic scenario, financial crisis, etc..) concession authorities had to put in place specific measures (including, but not limited to financial support) to safeguard the life of concessions. The issue of mature motorway concessions that will end their contracts in the next years has also to be raised by the States and European institutions in order to promote additional investments (for improving, upgrading and updating the infrastructure) under the existing model that has proven its success.

To conclude, it is important to say that there is not a unique financing scheme applying for all roads. Each project has to be analyzed individually in order to see how it can be financed and paid. The toll concession model is a good tool to finance and manage road infrastructures with consistent traffics levels however, for other projects with less demand, ad-hoc and tailormade solutions can also be deployed in the basis of the concession model with complementary revenues Nevertheless, for its wide deployment across Europe, it is essential to strengthen its legal framework by fixing the inefficiencies identified during the last years. European institutions have to take an active role in supporting the concession model by effectively cooperating with Members States in order to avoid that national transposition laws of European directives introduce stricter rules narrowing the scope of the European legislation while also ensuring timing and smooth implementation phase.

©SEOPAN

As it was said before, concessions usually last for decades and predictability of future cash flows and legal stability are key elements to guarantee the success of such contracts. At this point, a crucial element is the correct transfer of responsibility from the granting authority to the concessionaire. The range of risks in this kind of contracts is very wide and it can be categorized in (i) political and legal risks, (ii) technical risks, (iii) commercial risks and (iv) economic and financial risks. Ideally the risk allocation follows the principle that not all risks are equal and therefore should be carried out by the entity in possession of adequate structural tools for reducing the costs associated with bearing such risk. However, this risk allocation has not always been well established and there are cases of concessions in Europe facing excessive risks, out of their control, that are directly unaffordable and make the projects unviable. Here, two measures are needed: (i) to define clearly the limits of the different risks and (ii) to identify the cases/criteria to face a concession contract rebalance.

The European Files

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III/ Financing the evolutions of highway infrastructures in Europe

Time to review the legal framework for toll road concession system Christine Revault d’Allonnes Bonnefoy MEP, Member  of Committee on Transport and Tourism

Moving in the right direction © European Union 2015-European Parlement

W

ith more than 11, 882 km of highways, of which 9,048 km are under a concession system, the review of toll road concession systems represents both for the State and the users a crucial issue. Time has come to change the system thinking of the general interest and the users. For too long toll road concession holders have been benefiting from the continuous traffic growth without lowering toll rates. According to the French General Accounting Office report published in May 2014, and to the opinion of the French Competition Authority (FCA) published last September 2014, toll road concession holders widely overcompensated their financial needs to maintain and improve road networks, in regard to revenue growth and the exceptional profitability of the current system. Besides, toll rates growth has continuously been higher than inflation growth. But the private sector is not the only responsible for such an unbalanced situation between users and operators. It is the consequence of political choices made in the 2000s in favour of the privatisation of motorways. Concession contracts negotiated at that time have failed to protect both the users and the State interests. Questionnable political choices, lack of transparency, unbalanced and complex contracts, clearly favouring operators over users, are at the roots of the situation we are facing today. Moreover, motorways governance goes far beyond financial matters. We need to consider this issue under the prism of security and public service accessibility obligation.

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Learning from past mistakes, the French government decided to react by reopening the negotiation with motorway concession holders. Various objectives had lead this process: improving toll road rates regulation to protect the users purchasing power, improving transparency of the motorways’ governance, fostering the monitoring of operator’s profit and ensuring that such profit effectively contributes to the road infrastructures financing . Within this perspective, the creation of a working group gathering 15 National Assembly Members, representatives from the state administration and motorway concession holders was a good step taken by the government to move forward in a constructive and transparent approach. In parallel, the decree adopted January 27th 2015 to freeze motorway fees increase, starting on February 1st 2015 (initially planned at 0,57%,) showed the government’s determination to take its responsibilities.

What are the solutions at stake? During the negotiation, every possibility have been assessed, with the aim to find innovative and sustainable solutions. The agreement reached by the government with the road concession holders is balanced. On the one hand it secures long term investment and unblocks the 3.2 billion investment plan for motorways while expanding the Concession Contracts for 2 years. On the other hand it allows a better sharing of profits between the State and the government. In addition, trough the “law for activity and equal economic opportunity”, presented to the French Parliament on January 26th 2015, the reinforcement of the power of the Regulatory Body for Railway and Motorway Activities (ARAFER in French) in supervising the transparency and the toll road price will improve the motorways’ governance system. The Agency will make sure that the operators are duly implementing the

planned investments. It will also assess the operator’s profitability to ensure that, in the future, exceptional revenues that exceed the foreseen ones will benefit users, State and/or investments in road infrastructures. Innovative measures can also be taken to differentiate toll road price depending on the type of vehicles. Cleaner vehicles and shared vehicles could benefit from specific treatment.

Opening-up the debate to external cost and modal shift from road to rail It is well acknowledged that transports play a key role in achieving the 2030 EU greenhouse gas reduction target of at least 40% (compared to 1990). Shifting road transport to rail transport and internalizing external cost of road transport represent strategic goals to succeed in delivering cleaner transport system. Addressing such a challenge is no easy task. It goes with long term policy planning and requires a strong political commitment. Despite the fact that the 2011 White Paper clearly states that “transport charges and taxes must be restructured in the direction of wider application of the ‘polluterpayer’ and the ‘user-payer’ principle”, we are far from implementing a harmonised and ambitious policy at the European level. Nevertheless, there is still room to improve the current legislation. The reviewed “Eurovignette” directive, adopted in 2011, represents a legal base on which the EU could work to promote the “user-payer” principle. We must not exclude any legislative initiative. The debate on toll road concession is a good opportunity to put on the table the whole topic of internalising external transports costs, which is a necessity in order to tackle climate change and energy crisis.

© APCAP