Rationale for intervention

The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 sets legally binding net-zero greenhouse gas (GHG) emissions targets of 100% lower than the baseline by 2045 with interim targets for 2030 and 2040 of 75% and 90% reduction respectively. The Scottish Government (2021) report that emissions from transport currently account for approximately 25% of overall GHGs in Scotland. Of these, cars accounted for 39%, goods vehicles contributed 25%, while aviation and shipping accounted for 15% and 16%, respectively.

In the past four decades, car traffic on major roads in Scotland has tripled, with Transport Scotland recording the highest ever number of vehicle kilometres travelled on all roads in 2019. As such, transport emissions are not on track to meet Scotland's emissions reduction targets and measures to reduce the emissions from transport and shift towards more sustainable modes, must be advanced.

Market Failure

Cycle journeys confer societal benefits in terms of health improvement, congestion reduction, climate change and air quality improvement, among others (Davis, 2014). However, cycle journeys are not currently being supplied at a rate which optimises these benefits to society. This failure to capture the potential for journeys to be made by bicycle can be described as a net welfare loss to society. Government intervention can therefore be justified on the basis that the market has failed to deliver the best outcome and that intervention may be able to unlock benefits that would otherwise remain hidden. When it comes to the allocation of road space for safe cycling infrastructure, there is no meeting of supply and demand through a price mechanism, because roads are publicly funded through general taxation. Therefore, there is a missing market for road space and in order to allocate this common resource efficiently for the maximum public benefit, government intervention is justified.

Supply and Demand

The Cycling Action Plan for Scotland (CAPS) set a vision of 10% of journeys to be made by bicycle by the year 2020. The Scottish Government invested nearly £300 million in active travel between 2010 and 2019 and £80 million per year in 2018-19 alone. This budget is shared across 32 local authorities in Scotland and is broadly split into a capital grant, allocated for construction of traffic free cycle facilities and a revenue fund, aimed at changing individual behaviour by encouraging ‘smarter choices’.

It is acknowledged that increasing levels of cycling is a systemic issue and multiple factors must be addressed in a coordinated way, in order to increase uptake of physical activity on a day-to-day basis. Capital and revenue programmes broadly fall either side of supply or demand side of economic theory. Funding for cycle infrastructure seeks to increase the supply of safe cycle infrastructure, thereby increasing the number of journeys taken, while smarter choices measures are intended to increase demand for cycle journeys, by promoting active travel and thereby increasing individual’s willingness to choose a cycle journey over the alternative.

Despite the levels of investment to date, the share of journeys undertaken by bicycle is currently around 1.2% (Cycling Scotland, 2021). More, therefore needs to be done to shift the balance of demand for cycle journeys and supply of safe cycle routes, in order to achieve a fundamental shift large enough to support the target set by the Climate Change Plan to reduce car kilometres by 20% by 2030.