The lasting effects of the Diesel controversy

Emissions and costs of this debate have been weigh on consumers…

I was recently reminded of the effects of the long-lasting Diesel controversy on a trip to the Netherlands. The city centre of Amsterdam is a restricted traffic zone for certain types of engines, for the purpose of protecting air quality. The website of the city government says:

“City traffic is a major polluter of the air. Amsterdam therefore has environmental zones that keep the most polluting passenger cars, trucks, company cars, taxis, buses and mopeds and mopeds out of the city. With the environmental zone we want to improve the air quality in the city. In municipalities with an environmental zone you may encounter a yellow or green environmental zone. Amsterdam has a green environmental zone.”

Most diesel engines have since been barred from entering the city centre, under the threat of hefty fines for their users. For years, the city has refused to be polluted by cars. This anti-conformist left-wing municipality, traditionally run by the Labour Party and its green allies, managed to reduce traffic by 25% in the 1990s. This was despite the fact that road traffic increased by 60% elsewhere in the country during the same decade.

In March, a set of member states consisting of Austria, Belgium, Greece, Ireland, Lithuania, Luxembourg and Malta, and led by Denmark and the Netherlands, called on the EU to propose tougher emissions standards, in order to set phase-out dates for both petrol and diesel cars.

This contradicts the premise of free choices for consumers. Individual cities in Germany have also decided to implement similar bans; a third of Germans drive diesel cars. Are they supposed to sell their vehicles within the coming months? Or worse, should they move out of these two cities? What sense does it make to have a major continental country become a Swiss cheese of diesel no-go zones, in which both residents and visitors will have to count in major bypasses when they travel through the country?

On top of the consumer choice question, governments do not seem to link the question of CO2 emissions. Diesel emits more of those. A petrol engine ignites its petrol-air mixture by means of a spark plug. Diesel, on the other hand, manages without such external ignition. Highly compressed air heats the diesel fuel, which means that the energy in the fuel can be better utilised. As a result, fuel consumption and CO2 emissions are reduced. On average, diesel emits up to 15 percent less CO2 than petrol, even though it has a higher carbon content.

As for the argument on pollution affecting the health of residents, former President of the German Pneumology Society, Doctor Dieter Köhler, contradicts these activists and sees only a minor health-endangering role in particulate matter and nitrogen oxides. Many studies, he says, misinterpreted findings, and the costs of outlawing diesel vehicles would stand in no proportionate relationship to health hazards.

As mentioned above, some countries are calling for or have already set a phase-out date for fossil-fuel powered cars. Those dates vary, sometimes it’s 2035, sometimes it’s 2040. This poses a set of questions. In 2040, if we are still in need of cars running on fossil fuels, the ban would be disastrous and is unlikely to be implemented, or if we don’t need them anymore by that time the legislation would be obsolete. The pretense, however, that it is the role of the government to choose winners and losers in the innovation of a free market, is ridiculous.

We have to realise that when environmentalist activists say “ban diesel”, their actual aim in the long-run is to ban all vehicles running on fossil fuels, regardless of the economic and social consequences that this has.

Consumers deserve the right to choose their own cars, running on the petrol of their choice.

Originally published here.

Are we thinking correctly about rail passenger rights?

“Rail passenger rights” are paid by consumers…

The European Parliament’s TRAN committee recently approved new rail passenger rights legislation. With this new text, rail companies will be obligated to re-route passengers for delays of more than 100 minutes, provide bike racks, and assure “through-ticketing” under a single operator. This last requirement means that passengers will be eligible for the right of arriving at their final ticket destinations and that consumer rights requirements do not only apply to one leg of the journey. In essence, if you’re taking a Deutsche Bahn ticket from Cologne via Frankfurt to Munich, and start the journey with a delay in Cologne, then DB will be required to get you to your final destination no matter what.

The conversation about rail passenger rights is somewhat similar to that of air passenger rights, drawing the distinction between reimbursement rules and rights to active services. If a company fails to fulfil the service that the customer purchased, then from a mere contractual obligation, the customer ought to be able to choose between reimbursement and re-routing. However, adding additional layers such as compensation models and services on top of the existing services is not something that consumers should be burdened with.

An easy comparison for the purpose of this argument is that of a low-cost airline. Say you fly to a city for a short two-night trip, and you manage to pack all your belongings in a small personal item (like a backpack). With carriers such as RyanAir and EasyJet, you can get the lowest price in the cabin by choosing the most basic options, and sometimes flying to a regional airport that’s further away from the destination you’re trying to reach. Those wishing to get extra luggage, transport over-sized baggage, more spacious seats, airport lounge also pay additional fees for these privileges. We should not take the highest standard on the aircraft as the norm, and then derive that the basic options are somewhat “deprived” of these rights. 

In contrast, the basic options are opt-outs of these services that some consumers simply don’t want or need. On more high-end airlines, some of these services are included in the price, but end up alienating consumers looking for a cheap fare.

The same approach should be taken in the domain of railway mobility. While bike racks are a convenient addition, they do prevent rail operators from selling more access to seats and bring additional financial burden that consumers will end up paying. For state operators running deficits, this is of no particular concern. However, with an increasing number of private rail operators, we cannot pretend as if these companies provide certain services out of mere altruism. If consumers choose certain services, they should be able to pick those services they really want. The same applies to insurances to reach the final destination: as the number of rail operators multiplies, so do the expectations for different service levels. Low-cost providers will make cheap tickets available, with fewer expectations of support in case of delays, while more high-end operators will make sure that customers enjoy the highest possible comfort. Adding to that, insurance companies, sometimes through credit and debit cards, can also offer certain insurances as complementary services.

Consumers aren’t a monolithic bloc. Some are students who instead of hitchhiking to a summer camp prefer the cheapest possible ticket, with the longest possible itinerary. These students have different expectations than the Brussels bubble business traveller, and they should not be penalised with ticket price hikes because of additional service and insurance requirements.

Originally published here.

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