Abstract
This chapter discusses to what extent fuel taxes may need to be complemented by other government-induced measures for achieving a cost-effective reduction of carbon emissions from cars. The conclusion is that market failures and the need to prepare for longer-term climate objectives make it essential to regulate the specific fuel consumption of new cars. The current European regulation, being full of derogations and other loopholes, makes support from national incentive schemes important. However, for efficiency, and in order to prevent excessive taxation, common guidelines are needed. They should prescribe that all incentives must comply with certain basic principles, the three most important being technical neutrality and equal treatment of all cars; continuous incentive (rather than a number of CO2 thresholds); and that the size of fees and bonuses should not depart substantially from the marginal abatement cost in other sectors. However, selective incentives to emerging technologies by definition cannot be technologically neutral. Such incentives, thus, should only be allowed if the member state can show that there are good reasons to expect that the learning curve and economies of scale will make production cost decline considerably. This requirement will prevent them from subsidizing mature technologies and minimize the risk for lock-in effects and the distortion of competition.
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Notes
- 1.
http://ec.europa.eu/energy/climate_actions/doc/2008_res_ia_en.pdf [last accessed March 2011].
- 2.
This chapter partially draws on Kågeson (2010).
- 3.
Ulf Perbo, deputy director of Bil Sweden, personal communication.
- 4.
ACEA, press release 21.4.2010: http://www.acea.be/index.php/news/news_detail/an_increasing_number_of_member_states_levy_co2_based_taxation_or_incentivis [last accessed March 2011].
- 5.
Advocated by participating experts from Germany and the UK.
- 6.
Homogeneous Charge Compression Ignition.
- 7.
Opposed Piston Opposed Cylinder.
- 8.
Free Piston Energy Converter.
- 9.
The US has recently proposed that the International Maritime Organization (IMO) should develop a world-wide baseline and credit system for the specific emissions from maritime vessels.
- 10.
This is higher than the current average and reflects a trend toward higher vehicle age.
- 11.
Carlines No. 3, 2010. http://www.walshcarlines.com/pdf/nsl20103.pdf [last accessed March 2011].
- 12.
Carlines No. 3 2010, based on figures from ADEME.
- 13.
T&E Briefing: Vans and CO 2 , Updated September 2010. http://www.transportenvironment.org/tag/vans [last accessed March 2011].
- 14.
Based on COM(2009)593, Regulation of the European Parliament and of the Council, Setting emission performance standards for new light commercial vehicles as part of the Community’s integrated approach to reduce CO 2 emissions from light-duty vehicles.
- 15.
Based on each fuel’s content of carbon and/or energy diesel should actually be taxed above petrol.
- 16.
Ten years ago the taxation of fossil fuels in EU15 on average corresponded to €45–50 per ton of CO2 emitted (Kågeson 2001).
- 17.
The EU Commission (2010) has declared that it is about to prepare ‘guidelines on financial incentives to consumers to buy green vehicles’.
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Kågeson, P. (2012). Fuel Taxation, Regulations and Selective Incentives: Striking the Balance. In: Zachariadis, T. (eds) Cars and Carbon. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2123-4_6
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