TRAINSPOTTING: How a feebate works (this one’s for you, Duncan.)

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duncan-garner-taftLast week I had one of those frustrating encounters that eventually happen to all politicians.

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.

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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.

 Garner

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.

10 COMMENTS

  1. If it’s not Zombie economics it’s Marxism to them. Odd really, as I’m with Noam Chomsky on this one – the elites seem to be practicing a form of vulgar communism amongst themselves.

    There rhetoric is always of that of someone who never quit got to the end of “Wealth of Nations” or indeed “Das Kapital” – it’s an ideology based on partial reading and being as rude as possible.

    Not you fault Julie – just remember, they never finish a book and are always listening for what they want to hear.

  2. Julie Ann – sorry to hear that your earnest sharing of ideas in what should have been a normal interview ended like that. You trusted Garner to let you discuss ideas you’d like to see more of, but all he was looking for was an opportunity to twist your words and create a cheap stir.

    I think the important thing here is that you learn the futility of discussing anything with Garner that isn’t yet an official Green policy, because he will take any conjecture, innocent discussion of ideas, or flippant statement by a Green MP and turn it into a definite party policy (think ‘money printing’). Naturally, he then gets to ‘break’ the story and frame the issue.

    Behind the disarming image he presents – that of a keen, chubby, sweaty, slightly oafish hack – is a ruthless troll who knows how to keep his ratings up and will sieze on any opportunity to misrepresent what someone has said to get some coverage.

    Unfortunately, you are a Green MP, and you guys are his easiest and most favoured target when it comes to keeping his reputation and ratings in the black by stirring up Tory indignation.

  3. Environmentalists will be the new scapegoats after the right wing runs out of steam with bene bashing. They will be blamed for everything, from violent crime to oil spills. If you think the latter is unlikely, one only has to think of how some people were blaming environmentalists for the Pike River deaths instead of the real culprit – government deregulation.

    The right wing are, generally speaking, an unconscious/unreflective/ignorant bunch, and so are easily manipulated to direct their own negativity towards a vulnerable, easily targeted group in society.This, of course, is what happened in Germany. In Jungian terms, this is described as projecting your own “shadow” on to someone/something else.The government will try and use fearmongering as its primary weapon at the next elections.

    • I don’t think you need to worry about running out of beneficiaries to bash. Not while Labour and National follow the neo liberal agenda. I don’t think they’d get away with abolishing benefits completely.

      But when were environmentalists not the scapegoat?

      Oh well – nice to see the right cares so much about the poor. Like god, they must love the poor – they make so many of them.

  4. Marxist political economy makes far more sense than the self serving rubbish Hayek and Friedman churn out. As far as I’m aware, Marxism is the only theory that explains where profit comes from, and actually explains the rise of finance capital and speculation in terms which don’t only mean “We’re rich, we deserve more. The rest of you can starve.”

  5. Garner is a vicious tribal Tory. He did not misunderstand. He knows what he is doing. 3rd degree is a Tory secret weapon to be unleashed at election time.
    The policy you outlined appears very sound. I have always thought we should have a policy of charging more to register cars over 3 litres.

  6. Garner is working off his interest free bribe. He has no self respect. He doesn’t even pretend to be a journalist these days

  7. Julie Anne

    The ‘feebate’ policy sounds moderate and sensible (a mixed compliment coming from me), however you do it no service by describing it as:

    >> A beautiful market mechanism to make it more affordable to buy an efficient vehicle, which is then cheaper and cleaner to run. <<

    The 'feebate' is not a "market mechanism", it is a regulatory mechanism. Anyone who actually still supports market mechanisms will know this, and see your claim as either dishonest or foolish. Anyone who has had enough of politicians proposing "market mechanisms" will either do the same, or worse believe you, and have their support for the policy eroded.

    Please pass the message back to your political strategy boffins that trying to pass the Greens off as environmental libertarians by using buzz phrases like "market mechanisms" is not going to work, as most of your policies promote strong government intervention. All it does it give greenie-bashing ammunition to your fellow bloggers, whether liberal critics on your right (Labour supporters like Chris Trotter and Stuart Nash) and neo-marxist critics on your left (Mana supporters like Mike Treen).

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