Subsidies for Cleaner Transport Vehicles

1. EU Air quality policies Subsidies for Cleaner Transport Vehicles Jacques Delsalle, DG Environment

2. In short • Economic background • EU Policy • An example (France) • Next... • Workshop on Buses and urban captive fleets, 14/1/2005, Brussels

3. Background (1) • Avoid unduly distortion of competition in internal market • Producer subsidy different from other market interventions such as consumer subsidies or taxes. • Other elements of distortion not linked with government intervention • Avoid harmful effects • Over-production or harvesting of the subsidised product, • Creation ‘economic rents’

4. Background (2) • Subsidies can be justified in the context of stimulating technological change: e.g. clean vehicles • Reduce the risks inherent in not knowing how costs will decline as output expands. • Focus subsidies on capital costs • Ensure a powerful technology stimulus. • Update regularly the evaluation basis • Strong time-limits on the availability of the subsidy • Perform an extended Cost-benefits analysis

5. EU Policy on environmental subsidies • Guidelines on State aid for environmental protection • OJ C37/3 of 03.02.2001 • Allow State aid when necessary to ensure environmental protection and SD without having a disproportionate effect on competition and growth. • Expire at the end of 2007. Revision start in 2005 • Environmental Technologies Action Plan (COM(2004) 38) • General policy objective of the EU to advance sustainable development by the removal or reform of environmentally-harmful subsidies • (Broad Economic Policy Guidelines, 6th Environmental Action Programme, Sustainable Development Strategy, etc.) • OECD (Workshop on environmentally-harmful subsidies – policy issues and challenge, 2002)

6. French experience • ADEME, “Dispositif d'aides aux véhicules propres et économes » • a wide range of subsidies • Passenger cars, Buses, HGV, Waste collection, etc. • New vehicles & Retrofit (DPF) • Up to € 7.500 / vehicle • Limits in time and number of vehicles

7. Results • Success stories • Natural Gas Buses • Subsidy = 20% over-cost • Now 8% of the fleet, 30% market new buses • Strong co-operation with operators, vehicle and fuel producers • Impact support public authorities on image • “100 electric buses”, Natural Gas Waste collection • Some failures (e.g. LPG passenger cars) • Image? • New developments: • DPF trucks (subsidy + fiscal incentives linked with env performance) • Electric light trucks urban freight : 10 pilot cities

8. Evaluation of environmental and economic performance • Updated every 2 years (last: October 2004) • Builing a sound basis for: • Comparing technologies and identifying better options • Discussing with operators and providers (start-up problems) • Building sound evolution scenarios • Defining the subsidies for developing the most promising technology options

9. Environmental performance Source: ADEME

10. Multi-Criteria analysis Source: ADEME

11. More… • ADEME: • http://www.ademe.fr • Contact : Patrick Coroller (Patrick.Coroller@ademe.fr) • Workshop on potential EU policies to improve the contribution of urban buses and other captive fleets to urban air quality  • Brussels, 14 January 2005 • http://europa.eu.int/comm/environment/air/clean_bus/index.htm • Contact : Jacques Delsalle (jacques.delsalle@cec.eu.int)