• Ministers call for ‘scrapping schemes’ to be coordinated; T&E wants them scrapped

    EU economics ministers have asked the Commission to coordinate ‘vehicle scrapping schemes’ – taxpayer-funded payments to people who replace an old car with a new one. The schemes are being touted as environment-friendly, but T&E disputes this.

    Several EU governments have already agreed – or are in an advanced stage of considering – incentive schemes to scrap old and polluting cars. Last month Italy joined Germany in approving a scheme, and ministers from both Belgium and Great Britain have said they are close to introducing similar incentives.

    The Italian prime minister Silvio Berlusconi said of his government’s scheme to provide a €1500 incentive that it responded to several concerns, including the environment and road safety, but the main motivation appears to be to boost Europe’s car industry, which has seen a sharp fall in sales over the past year.


    Yet NGOs have long questioned the environmental benefits of scrapping old cars and replacing them with new ones. Failure to make significant progress on reducing greenhouse gas emissions from new cars, coupled with the fact that a significant amount of a car’s lifetime energy consumption comes in its manufacture, mean the environmental benefits are either modest or non-existent.

    T&E issued a statement just before the ministers’ ‘Competitiveness Council’ meeting earlier this month, saying scrapping schemes do little for the environment and can even be harmful. It cited an OECD study from 10 years ago which said: ‘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.’

    T&E policy officer Kerstin Meyer 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.’


    Incentives for scrapping old cars are just one of several measures the EU and national governments are considering to help the car industry. The German government is reported to be weighing up special credit for the Opel car maker, while the Commission is analysing the legality of multi-billion-euro government aid schemes for French and Spanish car makers. And Europe’s car umbrella association Acea has asked commissioners for more financial aid to develop ‘greener’ cars.

    Meyer added: ‘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 and costs of scrapping incentives, despite billions of euros of public money being at stake.’