The Norwegian fiscal regime has by far the strongest CO2 abatement effect.
The Danish system entails very high and convex registration tax rates with moderate CO2 differentiation. As of 2018 in Norway, tax rates are high and convex with strong CO2 differentiation and total exemptions for zero emission vehicles, even from value added tax. Sweden practices feebates – CO2 dependent subsidization along with moderate taxation.
Relying on a disaggregate discrete choice model of automobile purchase, four researchers at the Institute of Transport Economics (TØI) in Oslo have simulated the demand for passenger cars in Norway under a set of conditions resembling, respectively, the Danish, Norwegian or Swedish fiscal incentives before and after recent reforms. Their study has now been published in the International Journal of Sustainable Transportation.
Results have been derived in terms of energy technology market shares, average type approval CO2 emission rates, and aggregate fiscal revenue. The automobile taxation system is seen to have remarkable impacts on all three accounts. In essence, among the three jurisdictions examined, the Norwegian fiscal regime has by far the strongest CO2 abatement effect. The Danish system is less effective in terms of CO2 abatement, but provides twice as much government revenue. The Swedish feebate strategy is by far the least effective in terms of both CO2 mitigation and revenue collection. The model comes a long way to explain the marked differences between the three countries when it comes to new automobiles’ average CO2 emission rates.
• Automobile taxation is a powerful greenhouse gas abatement instrument.
• Tax exemptions for battery electric cars accelerate their market uptake.
• The disparate experiences of the three Scandinavian countries are quite instructive.
Vegard Østli, Lasse Fridstrøm, Niels Buus Kristensen and Gunnar Lindberg (2021): Comparing the Scandinavian automobile taxation systems and their CO2 mitigation effects. International Journal of Sustainable Transportation. https://doi.org/10.1080/15568318.2021.1949763