Heavy duty vehicles pay a levy per km which varies regarding EURO-emission standard. Electric and hydrogen HDV are exempted from the tax. The ultimate goal of the policy is to internalize all external cost of heavy duty transport transiting the Swiss alps and to incentivize the shift to train cargo. The heavy-duty (> 3.5 tonnes) vehicle fee (HVF) was introduced in 2001. Its prime goal is to internalise external road transport costs. The HVF is calculated on distance, weight and emissions standards, replacing a previous flat fee. Its initial rate was CHF 0.017/tonne/km, rising to CHF 0.025/tonne/km as from 1.1.2005; it will level off at a maximum CHF 0.0275/tonne/km in 2008. Parallel to the rate increases, the maximum lorry weight was lifted to 34 tonnes in 2001 and to 40 tonnes in 2005. This gradual approach gave hauliers time to improve productivity, which partly offset the cost of the HVF. In the first four years since the introduction of the HVF road transport costs have increased by some 6%. Two-thirds of HVF revenues are allocated to construction of rail infrastructure (including two trans-Alpine railway tunnels) to support modal shift. Annual revenues ranged between CHF 800-900 million (EUR 515-580 million) in the first four years and rose to some CHF 1.3 billion (EUR 840 million) in 2005. The HVF resulted from protracted bilateral transport negotiations with the EU. Switzerland was concerned that the lifting of the then prevailing 28- tonne limit on lorries, as demanded by the EU, would unleash massive transit traffic and seriously jeopardize constitutionally mandated modal shift and sustainability policies. The introduction of the HVF was approved by a 57% majority of the Swiss people in 1998. The effects of the HVF (as well as higher truck load limitations) are compelling. Freight mileage decreased 8% in 2001-04 after decade-long uninterrupted growth, while transported freight volumes actually increased. There was virtually no traffic rerouting through neighbouring countries. Transit mileage through the Alps decreased 8%. The decline was the steepest in the first two years due to fleet modernisation and efficiency gains. Provisional data for 2005 indicates a -3% mileage decline because of the rate increase. Modelling indicates that by 2007 CO2 emissions from road freight transport will be 6-8% below what would have happened without the new regime with HVF and higher weight limit. The main effects on transit are expected when high-performance modal shift infrastructure will become operational. Long-term, road freight mileage growth will resume in Switzerland, because of overall European transport trends, albeit more moderately than in the past. However, the share of rail transport in Switzerland is expected to grow from currently 39% to 47% by 2030, thereby reversing past trends. The current rates are 0.0031 CHF/tkm for Euro 3 trucks and below, 0.00269/tkm for Euro 4 and 5 trucks and 0.0026 CHF/tkm for Euro 6 trucks.