Electric Vehicle Transition and Road Transport Levies: Forecasts and Strategies
Battery electric vehicles (BEV) are increasingly replacing internal combustion engine vehicles (ICEV) – but what does this mean for public revenues? In their new article "Antriebswende und Straßenverkehrsabgaben: Prognosen und Strategien" (Electric Vehicle Transition and Road Transport Levies: Forecasts and Strategies), Maria Kennel, Gernot Sieg, and Berthold Wigger examine the impact of the electric vehicle transition on public revenues from motorized individual transport in Germany, currently around 51.2 billion euros per year. Since the energy tax as the largest revenue component does not apply to BEV, revenues will decline significantly with increasing fleet electrification and are projected to halve by 2050 relative to the 2024 baseline without policy intervention.
Using a dynamic simulation model, the authors compare five policy instruments (driving electricity tax, road pricing, vignette, motor vehicle tax increase, and energy tax increase) to offset the emerging revenue gap. For each instrument, they determine the required levy level and evaluate the scenarios with respect to efficiency, distribution, predictability, financing, and transition.
Road pricing scores highest on efficiency. The driving electricity tax is the least regressive. Only the energy tax increase accelerates the transition to electric mobility but cannot sustain the revenue target beyond 2040.
The article is published in the ORDO Yearbook. Link to Article.
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Urban street space is scarce and must be shared by different modes of transport. In this study, Gernot Sieg and Jan Wessel from the University of Münster analyse how street space should be allocated between cars, buses, bicycles, and parking in order to maximise the economic efficiency of the transport system. To this end, they develop an economic model of travel mode choice that accounts for how travel times, prices, and congestion influence travellers’ decisions. Applying the model to transport data from Berlin and New York City, the simulations show that reallocating street space away from cars towards buses and especially bicycles can substantially increase the efficiency of urban transport systems. The optimal extent of such reallocations differs between cities and is more pronounced in Berlin than in New York. Overall, the results suggest that reallocating street space can improve not only environmental outcomes, but also economic efficiency in urban transport. 
This year, the Institute of Transport Economics (IVM) hosted the annual meeting of the Economic Policy Committee of the German Economic Association (Verein für Socialpolitik). On March 18 and 19, leading scholars in economic policy from across Germany met in Münster to discuss the latest developments and findings in economic research.