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Mobility and Transport

Overview

Using a subsidy to encourage cycling can take one of two forms; providing a financial benefit for commuters to switch to cycling by paying for km travelled or subsidising the untaxed purchase of equipment through employee schemes.

Considerations for applicability

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Level of cycling

Once suitable cycling infrastructure is in place, potential cyclists may only lack the incentive to use their bike for commuting purposes. This measure is most suitable where accommodations have already been made for cycling within the city (e.g. appropriate infrastructure).

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Urban layout/topography

One of the key topographical influences will be the distance from residential areas to place of work and whether journeys involve long – or steep, hills. Traditionally, commuters have been unlikely to choose to travel long distances by bike, regardless of the incentive. The increasing popularity of electric bikes, however has changed this and financial support up-front for equipment may remove that final barrier in a switch to cycling.

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Population

Subsidies can be applied in ways that benefit certain population groups within the city. For example, commuters may be targeted and accessed through their employer benefits schemes – or students through a student union or representative body. Different demographic groups may also be enticed to cycle if they have access to e-bikes, which could enable groups of the population to travel by bike when they had been previously unable to do so.

Subsidies generally won’t benefit seasonal population groups like tourists.

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Finance Resources

Subsidies involve the provision of a financial incentive and will, therefore, require that appropriate funds are allocated for the duration of the subsidy period. Other costs will be related to the administration of the subsidy, including management of eligibility and payment of the subsidy (see Time & Human Resources).

City Administrations may wish to consider bringing local employers on board to contribute to the fund as they will realise benefits in the form of employee health and fewer parking spaces required.

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Time & Human Resources

Subsidies can be managed and administered so that applicants must apply within a window of time; which allows the city administration to limit the amount of time dedicated to managing the scheme.

Administration of the subsidy – and monitoring up-take and eligibility may be reasonably manpower-time consuming at its peak – however, as noted above, the administering body can decide how much time and manpower to devote to the measure. Manpower within the implementing body can also be limited to the absolute minimum by outsourcing grant administration to an experienced organisation (which will also incur costs).

Measure impact highlight

Public transport, bus and cyclist

Modal shift

The use of subsidies aimed at cycling is likely to encourage a modal shift or an increase in cycling frequency for some cyclists.

Note: An overview of the direct and indirect impacts resulting from correctly implemented cycling measures is available in Challenges that cities face and how cycling can address them

In-depth measure description, case studies and further guidance

[collapsed title=Detailed description of the measure]

Key features

Subsidies aimed at cycling can be provided to encourage uptake or an increase in cycle use through providing a financial benefit. Whilst the financial costs of providing and administering a subsidy might appear to be high, they are significantly less than those incurred due to infrastructure improvements or implementation. Additionally, many forms of incentive are available for the private or company car in member states across Europe. Subsidies/financial incentives are usually enabled through national policies; however, the following measures describe the approach that can be taken by city administrations in order to achieve modal shift benefits.

Moreover, there are many funding opportunities through European Commission schemes relating to cycling due to the combined positive health and environmental benefits of increased cycling mode share.

Subsidies may take the following form:

  • Workplace cycling km allowance whereby an organisation - or employer - pays employees a specified amount per kilometre travelled to employees who travel to and from work by bicycle during their daily commute. In some instances, this subsidy may also be paid to those who cycle part of the way and use public transport (for the remainder of their journey for the proportion of the journey cycled). This type of subsidy aimed at commuters who cycle equates to the provision of workplace parking or an employee bus service offered by some organisations.
  • Bicycle purchase employee benefit schemes may be offered as an employee incentive or benefit. In this instance, employees may be offered the opportunity to purchase a bicycle and cycling equipment and have the cost of the purchase taken directly from their pay in monthly instalments over a set period with no interest applied to the loan.
  • Bicycle purchase tax relief schemes can be applied to allow employees to benefit from a system like that above – however, they would also save in that the purchase payment instalments are removed from their pay before tax is calculated, thus saving them the taxation amount that would have applied prior to purchase.

The latter two methods may require a legislative and tax framework at a national level that allows tax relief or tax breaks and may not be within the remit of the city administration. Although the provision of subsidies is aimed at increasing cycling mode share, it is recommended that basic cycling infrastructure is in place or planned, to ensure safe cycling. Subsidies may also be treated as a one-off, limited time incentive in a city that wishes to increase the mode share and profile of cycling, although wider fiscal incentives enshrined in law would benefit all employees.

Function and objectives

Providing a financial incentive for modal shift may be one of the fastest routes to increasing cycling transport share. Those who take advantage of the subsidy – no matter how it is being offered are very likely to be people with an existing interest in making the switch who find themselves tipped by any financial gain from making the change. As such, offering subsidies and incentives are very likely to increase cycling mode share within city boundaries.

Complementary measures

There is a range of complementary measures that will support and enable an increase in cycling modal share alongside the provision of subsidies, including:

Performance

The primary impact of subsidising cycling is likely to be a modal shift from the private motor car to cycling. Additional secondary benefits include;

  • Raising the profile of cycling and strengthening support for cycling from newly ‘recruited’ cyclists.
  • Reduced congestion due to private vehicles during peak commuting hours.
  • Improvement in road safety as cyclists become more prominent and visible through increased modal share.
  • Improvement to the health of the cycling population as the levels of physical exercise increase – but also the reduced stress levels during the journey to work.
  • Improved air quality and reduced pollution.
  • Increase in access to e-bikes for people who have been unable to cycle using conventional bikes.
  • Community benefits as cyclists travel more slowly through commuting routes – there is a potential that they will stop to make purchases from local shops and amenities on their route home rather than larger or chain stores and refuelling stations that have ample parking. This also results in economic benefits to local communities.

Subsidising a shift to cycling as a means of transport has not been widely implemented in Europe (Handbook of good practice case studies for promotion of walking and cycling – PASTA, 2017). However, a kilometre allowance paid by employers has been available in Belgium since as early as 1997 to encourage commuting by bicycle (Who pays what for urban transport? Handbook of good practice – PASTA, 2014). The scheme has increased in popularity over the years, with more businesses now offering the allowance (up to 86% compared to 43% in 2005) according to the by Federal Public Service Mobility and Transport report published in 2016.

In 2017, France launched a fiscal plan to encourage a switch to cycling; offering a Cycling Kilometre Allowance for commuters who chose to cycle to work. The scheme offers 25 cents for every km travelled by bicycle during a normal commute to work, with the maximum annual allowance capped at €200. The €200 incentive is tax exempt and an allowance is also available on kilometres cycled to a public transport stop.

During the first six months of the scheme in 2016, 18 private business across France took part. Administrators at the city of La Rochelle who took part in a two-year public-sector pilot of the scheme (which ended in August 2018) made the decision to permanently introduce the scheme before trials had even been completed. City administrators at the city of La Rochelle emphasise that incentives are often available for those who travel by public transport in the form of reduced taxation on season pass prices and that this scheme makes the system fairer. Many public administrations provide subsidies to public transport providers to keep tickets prices low and incentivise commuting by public transport (Who pays what for urban transport? Handbook of good practice, 2014). With the Cycling Kilometre Allowance, benefits are realised by the individuals who make the modal shift to cycling rather than by private businesses.

A review of the pilot schemes in France found that where the subsidy was available, commuters who took part increased their levels of physical activity and were more likely to cycle to work every day. Additionally, the number of bicycle commuters increased as the trials continued over time – increasing by 50% initially (during trial phase), jumping to a 125% increase after only a year. Many of the commuters who switched to travelling by bicycle had previously used public transport, however, some private car users (20 %) also made the switch. Additional environmental benefits were also realised, with an estimated 2.7 tonnes per new cyclist per year).

In terms of the benefits of increased travel to work by bicycle, Transport for London’s “Healthy Streets for London - Prioritising walking, cycling and public transport to create a healthy city” published in 2017 provides firm evidence of health benefits when travellers engage in more active forms of transport.

Parameters of success or failure

Subsidising cycling as a means of transport is most beneficial when applied to local residents and commuters who frequently travel the same journey, rather than for tourism. This can apply to a wide range of different groups within a city; from school children and students to frequent commuters to a place of work.

To encourage a shift to cycling, it is recommended to ensure that the infrastructure is in place (or planned) to guarantee a stress-free and safe journey. In 2010, a scheme in Aveiro Municipality, Portugal relied on marketing, prizes and publicity to encourage residents to make a return to cycling rather than private car journeys. The terrain is largely flat and well suited to travelling by bicycle – a transport mode used frequently in the city in the past. Whilst successful at increasing the number of journeys by bicycle, negative feedback centred on a perceived lack of safety, high levels of traffic – and the need to provide showers at the destination (Köllinger et al, 2011).

Implementation of ‘push’ measures, such as introduction or increases in parking costs or restrictions placed on motorised traffic close to places of employment can complement the provision of subsidies (which act as ‘pull’ measures).

Subsidies should be complemented by the implementation of appropriate cycling infrastructure to adequately accommodate cycling levels.

Key lessons for transferability

The use of an independent secretariat responsible for communication, organising financing and overall management is recommended(PASTA).

Cycle highways are expensive and time-consuming to implement and are often built in stages. Cities should aim to secure funding and support that will facilitate the implementation of initial routes through to the completion of a comprehensive cycle network. When the Greater Copenhagen Superhighway concept was seeking funding, the Secretariat highlighted its relatively low cost, the benefits in reducing congestion and the individual and environmental health improvements (PASTA).

One of the many benefits of subsidies for capital purchase costs of cycling equipment is the level of flexibility that can be incorporated to the measure. The European Cyclists’ Federation produced a report in 2016 that assessed the impacts that subsidies on e-bike purchasing costs may have on the potential to expand the number of people who cycle using e-bikes. The report stated that a 10% subsidy on the cost of electric bikes may provide enough incentive to switch to e-bikes from traditional pedal-powered bicycles (enabling travel over longer distances, over hilly terrain). This report also highlights the preceding levels of national spending on incentives for electric vehicles (specifically passenger cars) and compares the value of subsidies for e-bikes, finding that value for money in terms of positive benefits from e-bikes would have been much greater. The report also provides an overview of regional and local level measures introduced by various member states. At the local, city-level subsidies have varied from up to €500 for e-bike purchase capital costs for private individuals – to lower levels of support for businesses. The support has been offered by a variety of bodies; from city administration to electricity providers (who subsequently offset the subsidy against private individual's electricity bills). Whether subsidies apply to e-bikes, to conventional bicycles - or both, should be determined by the implementing body, taking the primary characteristics (such as terrain, population, etc) and budget into account.

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[collapsed title=Case studies]

Cycling kilometre allowance (Indemnité kilométrique vélo - IKV) (La Rochelle, France)

  • Location: North/North East
  • Population: 167 675 (Medium urban area)
  • Cycling Modal Share: 8-10% (Climber city)

Background and context

City council employees in La Rochelle, France, have been encouraged to cycle to work using the Indemnité kilométrique vélo (IKV) pilot scheme which involves a financial contribution to the travel expenses incurred by those who cycle (using a traditional bicycle – or electric bike) from their usual place of residence to their workplace or public transport stop along the commute. The scheme is not necessarily restricted to public employees and could also be applied for private business employees.

Introduced at the start of 2017 by the Ville de La Rochelle and the CdA and was initially trialled. Since then, changes to regulations have been made that will enable private organisations to offer the subsidy.

Features

The allowance is effectively a contribution to the expenses incurred by those who cycle from their usual place of residence to their workplace, either using a conventional bicycle or an electric bicycle. Cycling to and from public transport stops is also covered by the allowance if this is facilitated by the respective public transport season ticket. The subsidy is currently 25 cents per kilometre and so the daily allowance of any individual is calculated by 25 cents x return journey in km. The annual allowance is this figure, multiplied by the number of days the employee has worked. The maximum allowance that any employee can receive is capped at €200 per year.

To be eligible for the scheme, an employee must simply register once and declare that he/she cycles to work. While the respective allowances are calculated as indicated above, there is currently no monitoring of the extent to which those employees registered cycle to work.

Performance

The pilot has been implemented to ensure greater equity between those who travel by other means, versus active modes of transport. In spite of the many and varied health and environmental benefits, those who walk, or cycle rarely receive any sort of travel subsidy or incentive – whilst commuters who use public transport often receive support to cover the cost of their season ticket – or some sort of tax break for private vehicle users who are required to drive to and from their place of work. So far, 215 employees of organisations taking part in the trial have benefited from the incentive: the total number of kilometres cycled by these employees amounts to 150,000 and the cost to local authorities has been €37,500.

Parameters of success/failure

It is important to stress the importance of the notion of equity implied by the implementation of such a measure. Those who use the active modes, i.e. cycling and walking, do not generally benefit from a financial incentive. Buses are often heavily subsidised, and many employees can receive support from their employer to cover a significant proportion of the price of their season ticket. Similarly, there are tax mechanisms with which it is possible for a car driver to claim his/her home-to-work transport costs and use this to reduce their tax liability. Implementing the IKV addresses the current imbalance in a fair and sustainable way.

As yet there has been no formal monitoring of the scheme to find out the extent to which it has increased cycling mode share – or changed people's habits.

Transferability

Cities that have a lack of parking facilities – or expensive parking facilities like La Rochelle may find that this is a good solution to their problem. The continued improvement of cycling infrastructure will also help to sustain the behaviour change achieved – and possibly extend it as cycling becomes more and more commonplace and facilities for cyclists improve.

Key insights and lessons learned

The city administration recognises that the high price of parking and vehicular restrictions near employment areas and in the centre of the city is significant in high uptake of the incentive. They have also resolved to ensure continuous improvement of the cycling infrastructure to make sure that increasing levels of cycling do not place too much stress on existing infrastructure and bicycle parking facilities.

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[collapsed title=Key guidance, further reading and references]

  • The Agence Française de Développement (AFD) and the Ministry of Ecology, Sustainable Development and Energy (MEDDE) (2014), Who pays what for urban transport? Handbook of good practices.
    who_pays_what_for_urban_transport_-_handbook-of-good-practices
    English
    (2.68 MB - PDF)
    Download
  • Transport for London (2017) Healthy Streets for London Prioritising walking, cycling and public transport to create a healthy city
    tfl_healthy_streets_for_london
    English
    (4.19 MB - PDF)
    Download
  • Handbook of good practice case studies for promotion of walking and cycling – PASTA, Florinda Boschetti, (Polis), PASTA Consortium, 2017
    pasta_handbook_of_good_practice_case_studies_for_promotion_of_walking_and_cycling
    English
    (2.07 MB - PDF)
    Download
  • European Cyclists’ Federation (2014) COMMUTING: WHO PAYS THE BILL? Overview of fiscal regimes for commuting in Europe and recommendations for establishing a level playing-field
    ecf_-_commuting_who_pays_the_bill
    English
    (620.92 KB - PDF)
    Download
  • European Cyclists’ Federation (2016) ELECTROMOBILITY FOR ALL Financial incentives for e-cycling
    ecf_-_electromobility_for_all_-_financial_incentives_for_e-cycling
    English
    (495.84 KB - PDF)
    Download
  • Christophe Pauwels and Peter Andries, Federal Public Service Mobility and Transport, Directorate General Sustainable Mobility and Rail Policy, Mobility Directorate (2016) Diagnosis of displacements home - workplace 2014
    diagnostic_des_deplacements
    English
    (3.81 MB - PDF)
    Download

    (In French)

  • Köllinger, C., Rzewnicki, R., and Fismer, R (2011) Lifecycle: How to run a cycling action. Life Cycle implementation manual
    life_cycle_implementation_manual
    English
    (2.96 MB - PDF)
    Download

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