Vehicle taxation has made new EU passenger vehicles more fuel-efficient

05-02-2015 | Publication

Tax incentives have motivated motorists to opt for more fuel-efficient vehicles more often, in 15 of the studied EU Member States. CO2 emissions from new passenger vehicles, per kilometre driven, therefore, have decreased by around 1.3% between 2001 and 2010, which is about a tenth of the total decrease over this period.

PBL Netherlands Environmental Assessment Agency, together with the University of Tilburg and CPB Netherlands Bureau for Economic Policy Analysis, conducted a study on 15 EU Member States*, for the 2001–2010 period, about the degree to which national tax policies have contributed to new passenger vehicles' CO2 emission reductions per kilometer driven. Those 15 countries are trying, in various ways, to create incentives for private motorists to opt for fuel-efficient vehicles with lower CO2 emission levels. To do so, governments may implement a variety of measures. This study has shown that greening the vehicle purchase tax (BMP, in Dutch) is effective, in this regard, because the level of such a tax depends on a vehicle’s CO2 emissions per kilometre driven. Countries that have implemented this policy have seen a substantial increase in the number of fuel-efficient vehicles sold, and a related decrease in those less fuel-efficient. One of the other possible measures to tempt motorists to opt for fuel-efficient vehicles is that of increasing fuel tax. Although this also has some effect, it can have a negative impact on petrol stations along national borders if neighbouring countries do not impose such taxes. The greening of road tax hardly has an impact on vehicle choice.

* Belgium, Denmark, Germany, Finland, France, Greece, United Kingdom, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal, Spain, Sweden