Duncan Garner interviewed me on Radio Live (you can listen if you select Wednesday, 15.45) about electric cars and how the Green Party will encourage their uptake.
Now, I’m not exactly a huge fan of electric cars. Sure – they could be better than petrol cars, for a number of reasons. But I’m all about reducing car dependence, which means focussing on smarter alternatives to cars: for short trips this means safer walking and cycling, and for longer trips, making trains and buses a more convenient and realistic option for more people.
But cars will always be the most useful tool for some trips, and eventually we’re going to have to get off fossil fuels completely. Electric cars are one technology (along with biofuels) that may prove very useful – especially as we have plentiful renewable electricity in Aotearoa. The Green Party does have some good policies to encourage more efficient cars, even though we don’t expect that to be the entire solution.
I’ll admit, it might not have been my most eloquent interview, but Garner did give me plenty of time and I thought I explained reasonably clearly how one of our policy initiatives to encourage uptake of more fuel efficient vehicles would work.
It’s called a ‘feebate’ and is employed successfully in a number of other countries. Based on emissions, you set a pivot point or threshold. Above this point, higher emissions vehicles pay a fee at the point of import, and below this point lower emissions vehicles get a rebate. The more polluting the car, the higher the fee. The cleaner the car, the bigger the rebate. Simple! A beautiful market mechanism to make it more affordable to buy an efficient vehicle, which is then cheaper and cleaner to run.
The UNEP says this about feebates:
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.
Note: at no point in the interview did I say the ‘fee’ would apply to all petrol vehicles. I also emphasised that it wouldn’t be huge. Perhaps in the order of 5% of the value of the car, but since fees are based on emissions, not value of the car, this was only to give some indication of the order of magnitude. (I.e. it’s not going to be a $50,000 fee straight away.)
Polluters pay, that’s fair. It helps consumers, because often they make purchase decisions based on the capital cost of the vehicle, without considering the ongoing running costs. Incentivising efficient vehicles will save us on our $8 billion oil bill, and save consumers on petrol every time they fill up. Because the rebate applies to all low-emissions vehicles, it can apply to low-cost petrol cars that have small engines, or clean burning modern diesel cars.
Duncan clearly didn’t quite pick up on that point, unfortunately, and promptly tweeted that the Greens were planning to put an additional tax on all petrol cars.
A few predictable right wing types commented that such a tax would ‘hurt the poor’. Because obviously the poor are saving up their limited disposable income to buy gas-guzzling vehicles. When I rejoined that it was a conventional economic instrument designed to internalise externalities and was revenue neutral, they replied that it was ’Marxism’. I knew at that point further debate was futile.
In all seriousness, the poor are not disadvantaged by policies that make the price of pollution more direct, because the feebate scheme will make more efficient vehicles more affordable (and they are cheaper to run).
Lower income people already own fewer cars (and fewer new SUVs), and drive less at peak times. Policies that subsidise high vehicle use are regressive because they largely benefit high-income people and they reduce one’s ability to live and work without having to own a vehicle. Smart, green transport reduces car dependence and benefits lower income families by making both transport and housing more affordable. It also reduces the stigma associated with taking the bus or riding a bike.
In future posts I will explore some of the social equity benefits of smart green transport. In the meantime, rest assured, the Green Party is not planning to tax all petrol vehicles, even if that is the story Duncan finds easier to tell.