ISE09/14-15

• In his 2015 Policy Address, the Chief Executive announced that the Government would set up three low emission zones ("LEZs") by end 2015 to improve roadside air quality. Under the proposed plan, franchised bus operators will deploy only low emission buses to run at major corridors in Central, Causeway Bay and Mong Kok. This issue of Essentials gives an overview of LEZs and experience of London in designing and operating the world's largest LEZ.
• Unlike road pricing scheme which aims at easing traffic congestion, LEZ is an area where vehicle entry into the zone is restricted unless the vehicle meets specified emission standards. Any vehicles that fail the standards may be either excluded from entering the zone or discouraged from entering by charging. Such zone usually covers the city centre where traffic is heavy and has clear boundary marked with visible signs.

How low emission is low

• Low emission vehicle technologies are fast developing, along with zero-emission vehicles being gradually rolled out in the market. However, for the combustion engine vehicles, there is no absolute benchmark on low emission as the limits on vehicle exhaust gas are constantly upgraded over time as technology advances. In other words, LEZ's emission criteria might be tightened periodically to serve its purpose. Ideally, LEZ will be redundant when all vehicles are emission free.
• A common and internationally adopted vehicle emission standard is the European Union standards ("Euro") which Hong Kong closely follows. All newly registered vehicles are legally required to meet the latest limits for various pollutants in force. The current standard in Hong Kong is Euro V, which has come into force since 2012.^{1Legend symbol denoting Compared with the preceding standard, i.e. Euro IV, a Euro V heavy diesel vehicle emits 40% less nitrogen oxides and a light goods vehicle emits 80% less particulate matter.} The emission criteria proposed for LEZs in Hong Kong is Euro IV which was introduced in 2006. Meanwhile, the European Union has begun rolling out in phases the Euro VI standard for different vehicle classes since 2014.

Considerations of setting up LEZ

• There is no international standard on how and when LEZs should be set up. Each city can design its LEZs to cater for its own needs. In western Europe where LEZs have been created in many cities, their LEZs may vary in size, types of vehicle restriction, emission criteria, enforcement method and penalty. Some of these cities have established LEZs as one of the measures to meet air quality objectives at pollution hotspots.
• Prior to setting up the zone, policy makers may assess the costs and benefits of different proposed LEZ options, such as the anticipated air quality improvement and associated health benefits, the cost of creating and running the zone, and extra costs incurred by the operators to upgrade their vehicles. Policy makers may also have to decide the implementation timetable and future roadmap, and formulate a strategy of stakeholder engagement and public education.
• The LEZ design may require trade-offs between different parameters. A bigger zone may yield greater air quality benefits but it may also increase the number of vehicles affected, therefore making it more difficult or costly to enforce and detect non-complying vehicles. A smaller zone may not deliver the benefits sufficient to justify the costs but it is easier to be administered and enforced.
• The vehicle types to be restricted may depend on their respective traffic volume and the pollution contribution. Diesel vehicles are usually the primary targets as they emit more particulate matter ("PM") and nitrogen oxides than the petrol ones. Heavy vehicles are often among the first to be affected as they tend to be smaller in number but individually more polluting.
• Selection of the emission criteria and the pace of criteria upgrade will also have direct impacts on the number of vehicles affected and the extra upgrade or retrofit costs incurred. For enforcement purpose, a well-established vehicle database is essential for detection of non-complying vehicles, irrespective of whether a more expensive automatic or a cheaper manual detection method is used.

The London LEZ

Design and planning stage

• The London LEZ has been the world's largest, with a size of 1 580 sq km covering the whole Greater London. Initiated by the former Mayor of London as part of an overall strategy to meet legal-binding European air quality targets, the scheme aims to spur faster and voluntary replacement or retrofit of old and polluting diesel vehicles. Britain could be liable to a fine for failure to meet those targets.
• Detailed studies on the viability of alternatives and different LEZ scheme options, and a strategic review on these studies were commissioned or carried out by Transport for London ("TfL") between 2001 and 2004. Business and economic, and environmental impact assessments were also conducted. These studies culminated in 2006 the favoured London wide scheme.^{2Legend symbol denoting The scheme is expected to bring public health benefits at estimated monetary values between £140 million (HK$1.67 billion) and £210 million (HK$2.5 billion). However, it might also lead to overall economy loss of between £100 million (HK$1.19 billion) and £270 million (HK$3.2 billion) up to 2015 (at 2008 prices), mostly due to costs of complying with the emission requirements. The camera system costs an estimated £57 million (HK$680 million) to set up and an average £10 million (HK$119 million) to run per year.}
• The proposal was opposed by the business and logistics sectors which were worried of their fleet becoming redundant while transport costs for goods and passengers going up. They sought to limit the scope of the scheme and demand more government incentives.^{3Legend symbol denoting One of the freight industry's suggestions was provision of grants or subsidy to help operators to upgrade their fleet. However, the London authority concluded it as not cost-effective while the European Union also had a policy to limit such grant to a certain percentage of capital cost for environmental upgrade.} After a series of consultation and stakeholders engagement exercises, a revised scheme focusing only on PM emission was finally introduced in February 2008.

Implementation stage

• The scheme initially targeted only pre-Euro III heaviest diesel trucks, the most individually polluting vehicles, and then gradually expanded to cover other diesel vehicle classes. It was extended to coaches, buses and lighter heavy trucks in July 2008 and heavier vans and minibuses in January 2012 respectively. Emission criteria have also been upgraded from Euro III to IV for the heavy diesel vehicles since January 2012. Cars and taxis, despite constituting up to 80% of traffic flow, were all along excluded for cost-effectiveness concern.
• Instead of introducing a rigid and blanket ban on non-complying vehicles, the London authority decided to impose an entry charge, which was backed by a Charging Order Scheme issued under the Greater London Authority Act and Transport Act. The charge has been set at a level sufficiently high enough to encourage vehicle upgrade. The current charge for a non-complying vehicle entering the zone is up to £200 (HK$2,386) per day.
• The scheme is enforced through a fixed and mobile network of over 300 automatic car plate recognition cameras installed at major routes into and within the zone. The network is linked to the database of the vehicle licensing authority so that images captured can be matched against the records. Registered owners of non-complying vehicles could face a penalty up to £1,000 (HK$11,930) if evading the entry charge.
• In the early stage, the compliance rate for heavy goods vehicles rose from 80% in 2007 to 98% by second half of 2008. Only a small number of vehicles, an average of 140 vehicles per week in 2009, chose to pay to enter the zone. It was also reported that the charge and penalty collected was less than £1.8 million (HK$21.4 million) a year between 2008 and 2011.
• Based on the profiles of vehicles entering the zone, it was estimated that the first two phases of the scheme brought about 1.9% reduction in road traffic related PM emission, lower than the previously projected 2.6%. However, black carbon, a toxic element in the PM, has decreased at some locations of London following the scheme.^{4Legend symbol denoting Preliminary monitoring results for the early LEZ phases showed no clear decrease in concentration of larger particles but there was some reduction in the concentration of fine particles, and black carbon at some locations, according to a briefing note submitted to Greater London Authority's Environment and Health Committee in July 2012.}
• The Mayor of London has recently put forward a new proposal of setting up an ultra-low emission zone in 2020 in Central London which would also target cars and taxis, and adopt tougher emission criteria with a focus on nitrogen oxides. Consultation of the proposal ended in January 2015 and a decision would be made this year.

Features of the London LEZ

• Clear goal: The London authority stressed the overriding need to improve air quality and the public health benefits that LEZ might bring about when it sought public support for the scheme.
• Charging or ban: A charging scheme was preferred over a total ban on polluting vehicles from entering the zone as the latter could not have given operators the flexibility in fleet deployment and time to make the transition.
• Phased approach: A phased-scheme setting different effective dates for different emission criteria and vehicle classes was adopted for smooth operation. By publicizing the phases well before the effective dates, operators were allowed sufficient time to ensure that their vehicles complied with the standards. As a result, the London authority saw an increased proportion of vehicles meeting the criteria even before the launch of the scheme.
• Early engagement: Operators' concerns were dealt with in the engagement process that began a year before the start of the official public consultation exercise. The scheme's project team also met every quarter the most vocal groups to collect their views and feedback on scheme designs.
• Responsiveness: In response to business and logistics sectors' concerns, the London authority had postponed extending the scheme to cover heavier vans and minibuses. It also abandoned an original idea of incorporating new nitrogen oxides emission criteria to minimize impacts on business.
• With limited incentives for vehicle replacement or retrofit in place,^{5Legend symbol denoting The Office of Low Emission Vehicles of the UK government provides grants of up to £800 (HK$9,520) and £500 (HK$5,950) for purchasing electric plug-in vans and cars respectively. There are also other supporting measures such as discounts on annual vehicle excise duty for eligible vehicles which have been retrofitted to attain higher emission standards.} the scheme has demonstrated itself as a viable alternative of fostering a voluntary diesel fleet upgrade by introducing a financial disincentive set at a level reasonably high to drive the upgrade. A long lead time of up to seven years before the introduction of the London LEZ is observed, allowing room for feasibility studies, reviews, impact assessments, stakeholders engagement, and consultations on the details of the scheme. While detection of non-complying vehicles and penalizing their owners are not the primary objectives of the scheme, a clear legal framework, computerized vehicle database, and effective enforcement system are all essential elements to administer a scheme with a charging component.

Prepared by CHEUNG Chi-fai
Research Office
Information Services Division
Legislative Council Secretariat
18 March 2015