Feebates

• France
• Canada
• China
• United Kingdom

Feebates are essentially a fee on inefficient technology and a rebate on efficient vehicles. The International Council on Clean Transportation published a report on best practices in designing and implementing fee bate programmes.

According to David L. Greene, Professor of Economics at the University of Tennessee, feebates are a fiscal policy for encouraging car buyers to prefer more efficient, lower emission vehicles and manufacturers to design them.

• FEEs on inefficient vehicles; and
• ReBATEs on efficient vehicles.

A "benchmark" defines who pays and who receives benefits. A "rate" determines the marginal costs and benefits. Depending on the choice of benchmark, feebates can produce revenue, be revenue neutral or be a net subsidy to car purchases. A detailed presentation on feebates is available for download here, with examples of feebate systems in France, Norway, Denmark and the US. The ICCT has also published a document on Best Practices for Feebate Program Design and Implementation.

Today, 16 countries have some form of CO2 or fuel consumption (l/100km) tax on light-duty vehicles:

• New vehicle purchase or registration:

• Austria, Canada, Finland, France, Ireland, Netherlands, Norway, Portugal, Spain, U.S.A.

• Annual or recurring registration fee:

• Denmark, Germany, Ireland, Luxembourg, Portugal, Sweden, UK.

On April 16th 2009, the Secretaries of State for Transport and Business, jointly announced the UK’s strategy for ultra low carbon vehicles, which includes a £250 million fund, stretched over 2009-2014 time period, for consumer incentives to stimulate the take-up of electric and plug-in-hybrid hybrid cars by around £2000-5000. However, eligible cars will need to meet strict safety standards, not exceed a maximum CO2 ceiling and be designed for the mass market.

Feebate programs can be extremely useful in supporting the widespread adoption of clean fuel and vehicle technologies. When developed and implemented correctly, government subsidies can speed up the emergence of new, clean technologies and help to ensure economies of scale are reached, so that the next generation of vehicles are more affordable to the general public without government intervention in the market.

France’s Bonus-Malus program

The Bonus-Malus program, part of France’ comprehensive environmental framework known as the Grenelle Program, paid buyers (in 2009) of cars emitting a maximum of 160 grams of carbon dioxide per km (209 grams per mile) a bonus ranging from $255-6,365 depending on emissions levels. In 2010, the maximum 125 grams per km, and bonus’s are reduced.

Credit: David L. Greene, Mexico 2010

Canada

Canada has enacted a feebate program. The feebate structure consists of two programs. The ecoAuto rebate program offers rebates from C$1,000 to C$2,000 to people who buy or enter a long-term lease (12 months or more) for a fuel-efficient vehicle. The ecoAuto rebates apply to cars that get combined fuel economy of 6.5 L/100km (36 mpg US) or better and new light trucks getting 8.3 L/100km (28 mpg US) or better. Additionally, the initiative has a rebate for flex-fuel vehicles with E85 consumption ratings of at least 13 L/100km.

Starting July 1st, 2010, Ontario will offer a rebate of C$5,000-8,500 to consumers, businesses, or other organizations that purchase new, plug-in, hybrid electric, or battery electric vehicles. The rebate is offered to the first 10,000 customers, and is hoped to help Ontario achieve it goal to have 5% of the provinces vehicles electrically powered by 2020 and to reduce emissions of greenhouse gases 6% from 1990 levels by 2014.

China

China has planned to spend 12 billion Yaun ($1.76 billion) to subsidize small, fuel efficient vehicles, as a broader plan to cut transport related emissions. Consumers who purchase 1.6 litre engine vehicles or smaller and which consume 20 percent less fuel than current standards will have subsidies of 3,000 Yaun off of the original price. Those who purchase electric vehicles or plug-in hybrid vehicles will have 50,000 Yaun ($7,320) off the original price of the vehicle. The subsidies will not be given directly to the purchaser of the vehicle, but will be allocated directly to the automaker, who will reduce the price of the vehicle accordingly. For more information, click here.

United Kingdom

On April 16th 2009, the Secretaries of State for Transport and Business, jointly announced UK’s strategy for ultra low carbon vehicles, which includes a £250 million fund, stretched over 2009-2014 time period, for consumer incentives to stimulate the take-up of electric and plug-in-hybrid hybrid cars by around £2000-5000. However eligible cars will need to meet strict safety standards, not exceed a maximum CO2 ceiling and be designed fro the mass market.