• EU should not encourage subsidies for new cars

    European member state industry ministers will discuss how the financial crisis is affecting the European car industry at the Competitiveness Council meeting, in Brussels on Thursday 5 March 2009.

    [mailchimp_signup][/mailchimp_signup]According to draft conclusions of the meeting, ministers will ask the Commission to coordinate so-called ‘scrapping schemes’, taxpayer-funded payments to buyers of new cars who scrap a very old model. The draft conclusions state that such schemes may have ‘significant positive effects on…reaching European environmental targets’.

    T&E’s view
    In general such schemes do little for the environment and can even be harmful.

    A study carried out by the OECD (1) says “these schemes have a high average cost per tonne of pollution avoided and they do not compare favourably with other alternative policy tools on purely environmental grounds”.

    The worst current example is in Germany where the government offers EUR 2500 to new car buyers regardless of the CO2 emissions of the new model purchased. That means someone who scraps a 1999 Volkswagen Lupo TDi 3L, the most fuel-efficient car ever mass-produced in Europe (2.99 litres/100km : 81g CO2/km) and buys a 2009 Porsche Cayenne Turbo (14.9 litres/100km : 358g CO2/km) would receive the taxpayer-funded payment.

    Kerstin Meyer of T&E said: “With schools and hospitals all expected to face budget cuts as this financial crisis starts to bite, it makes no sense to start subsidising new cars with increasingly scarce public money.”

    “It is ironic that the car industry has cried foul every time a piece of environmental regulation has been put forward and demanded impact assessment after impact assessment. But they are strangely quiet on the subject of assessing the environmental benefits vs costs of scrapping incentives, despite billions of public money being at stake.”

    (1) European Conference of Ministers of Transport: Cleaner Cars. Fleet Renewal and Scrappage Schemes, Guide to good practice. OECD 1999

    – To highlight the absurdity of using public funds to subsidise new car buyers, German T&E member organisation VCD (www.vcd.org) has been encouraging members of the public to scrap an old car but request a subsidy towards public transport tickets or a new bicycle. So far over 5000 people have taken part and sent applications to the government. The ministry didn’t see the funny side, and have threatened legal action. See press release (in German): https://www.vcd.org/688.html?&tx_cwtpresscenter_pi1[showUid]=599&cHash=eac9a98a3b