Norway is an outlier in electic car adoption.
Studies on the climate footprint of electric cars all reach the same conclusion. The CO2e footprint of a battery electric vehicle depends highly on the electricity source that powers it during the driving phase of the lifecycle, but in all cases, electric cars do not have a significantly larger climate impact than internal combustion engine cars, and in most cases it is lower. The argument about grey energy related to battery pack production does not resist scrutiny.
Then, if battery electric cars are useful in the fight against climate change, are subsidies a reasonable and effective method to fight climate change ? The most extreme experiment is taking place in Norway, and the german ministry for the environment has recently mandated a study which contains interesting findings.
Norway has deployed unparalleled incentives favoring the purchase of plug-in hybrid (PHEV) and battery electric (BEV) cars. They include fiscal and practical measures:
– No purchase/import taxes (1990)
– Exemption from 25% VAT on purchase (2001)
– Low annual road tax (1996)
– No charges on toll roads or ferries (1997 and 2009)
– Free municipal parking (1999)
– Access to bus lanes (2005)
– 50 % reduced company car tax (2000)
– Exemption from 25% VAT on leasing (2015)
The norwegian government nearly obsoleted the most onerous incentives for the 2018 fiscal year but finally backtracked.
As a result of these policies, the share of PHEV and BEV in passenger car sales has increased radically to levels unseen elsewhere in the world (source):
The logical consequence of this sales take-off has been an increase in the PHEV and BEV share of the fleet:
One can only conclude that the bouquet of norwegian incentives are an effective catalyst to the adoption of electric cars by consumers, and consumers are first and foremost motivated by the financial aspect.
The norwegian government however pays a steep price for these policies. The german study computes the cost of each measure per ton of CO2 emissions avoided (norwegian electricity is 96% hydroelectric):
– 5463€/t CO2 for free parking
– 3992€/t CO2 for VAT and purchase tax exemption
– 3782€/t CO2 for road tax exemption
Other measures such as access to bus lanes have a lower financial impact. The study reaches a combined cost of 3571€/t CO2.
Is this money well invested ? Is such an amount justifiable while climate change is a global issue that can be fought in a number of ways ? An alterantive would be to acquire carbon credits or to finance projects at scale directly. Carbon credit prices fluctuate around 5 to 10€/t CO2. The norwegian government thus pays 350x more to reduce the mobility footprint of its population. Other benefits can be a consideration, such as local air or noise pollution, but from a climate change standpoint, it is difficult to find a rationale for this policy. A study from the University of Trondheim was asking in 2015 already that such wasteful measures be sunset in favor of more effective alternatives.
The norwegian government appears stuck with a policy which appears to have popular appeal, but which represents questionable use of the funds afforded – ironically or hypocritically – by the revenues of the fossil fuel industry (21% of state revenues).
Links
Forum topic – Hybrid and electric road tests – further reading:
