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Impacts of an emission based private car taxation policy - First year ex-post analysis

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  • Rogan, Fionn
  • Dennehy, Emer
  • Daly, Hannah
  • Howley, Martin
  • Ó Gallachóir, Brian P.
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    Abstract

    This paper assesses the impacts of a targeted policy designed to influence car purchasing trends towards lower CO2 emitting vehicles. Vehicle registration tax and annual motor tax rates in Ireland changed in July 2008 from being based on engine size to emissions performance of cars. This paper provides a one year ex-post analysis of the first year of the tax change, tracking the change in purchasing trends arising from the measure related to specific CO2 emissions, engine size and fuel, and the implications for car prices, CO2 emissions abatement, and revenue gathered. While engine efficiency improvements had been offset by purchasing trends towards larger and generally less efficient cars in the past, with the average MJ/km remaining constant from 2000 to 2007, this analysis shows that in the first year of the new taxation system the average specific emissions of new cars fell by 13% to 145Â g/km. This was brought about, not by a reduction in engine size, but rather through a significant shift to diesel cars. Despite an unexpected reduction in car sales due to a recession in 2008, the policy measure has had a larger than anticipated impact on CO2 emissions, calculated to be 5.9Â ktCO2 in the first year of the measure. The strong price signal did however result in a 33% reduction in tax revenue from VRT, in financial terms amounting to a drop of [euro]166 million compared to a baseline situation.

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    Bibliographic Info

    Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

    Volume (Year): 45 (2011)
    Issue (Month): 7 (August)
    Pages: 583-597

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    Handle: RePEc:eee:transa:v:45:y:2011:i:7:p:583-597

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    Related research

    Keywords: Transport energy Private car CO2 emissions reduction Climate change policy Ex-post analysis Ireland;

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    References

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    1. Hull, David & Ó Gallachóir, Brian P. & Walker, Neil, 2009. "Development of a modelling framework in response to new European energy-efficiency regulatory obligations: The Irish experience," Energy Policy, Elsevier, vol. 37(12), pages 5363-5375, December.
    2. Poudenx, Pascal, 2008. "The effect of transportation policies on energy consumption and greenhouse gas emission from urban passenger transportation," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 42(6), pages 901-909, July.
    3. Sterner, Thomas, 2007. "Fuel taxes: An important instrument for climate policy," Energy Policy, Elsevier, vol. 35(6), pages 3194-3202, June.
    4. Mandell, Svante, 2008. "Policies towards a more efficient car fleet," Working Papers 2008:12, Swedish National Road & Transport Research Institute (VTI).
    5. Ó Gallachóir, Brian P. & Howley, Martin & Cunningham, Stephen & Bazilian, Morgan, 2009. "How private car purchasing trends offset efficiency gains and the successful energy policy response," Energy Policy, Elsevier, vol. 37(10), pages 3790-3802, October.
    6. Moore, Adrian T. & Staley, Samuel R. & Poole Jr., Robert W., 2010. "The role of VMT reduction in meeting climate change policy goals," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 44(8), pages 565-574, October.
    7. Shiau, Ching-Shin Norman & Michalek, Jeremy J. & Hendrickson, Chris T., 2009. "A structural analysis of vehicle design responses to Corporate Average Fuel Economy policy," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 43(9-10), pages 814-828, November.
    8. Giblin, S. & McNabola, A., 2009. "Modelling the impacts of a carbon emission-differentiated vehicle tax system on CO2 emissions intensity from new vehicle purchases in Ireland," Energy Policy, Elsevier, vol. 37(4), pages 1404-1411, April.
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    Cited by:
    1. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Trade-offs in CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," Working Paper Series, The Rimini Centre for Economic Analysis 33_12, The Rimini Centre for Economic Analysis.
    2. John Eakins, 2014. "An Application of the Double Hurdle Model to Petrol and Diesel Household Expenditures in Ireland," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS), Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey 145, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    3. Chiodi, Alessandro & Gargiulo, Maurizio & Deane, J.P. & Lavigne, Denis & Rout, Ullash K. & Ó Gallachóir, Brian P., 2013. "Modelling the impacts of challenging 2020 non-ETS GHG emissions reduction targets on Ireland′s energy system," Energy Policy, Elsevier, vol. 62(C), pages 1438-1452.
    4. Jarmila Zimmermannová, 2013. "Current and Proposed CO2 Taxation in the European Union Member States in the Energy Sector," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2013(2), pages 40-54.
    5. Binder, Stefan & Macfarlane, Gregory S. & Garrow, Laurie A. & Bierlaire, Michel, 2014. "Associations among household characteristics, vehicle characteristics and emissions failures: An application of targeted marketing data," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 59(C), pages 122-133.
    6. Adamos Adamou & Sofronis Clerides & Theodoros Zachariadis, 2012. "Assessment of CO2-Oriented Vehicle Tax Reforms: A Case Study of Greece," University of Cyprus Working Papers in Economics, University of Cyprus Department of Economics 04-2012, University of Cyprus Department of Economics.
    7. van der Vooren, A. & Alkemade, F. & Hekkert, M.P., 2013. "Environmental performance and firm strategies in the dutch automotive sector," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 54(C), pages 111-126.
    8. Daly, Hannah E. & Ó Gallachóir, Brian P., 2011. "Modelling future private car energy demand in Ireland," Energy Policy, Elsevier, vol. 39(12), pages 7815-7824.
    9. Calnan, P. & Deane, J.P. & Ó Gallachóir, B.P., 2013. "Modelling the impact of EVs on electricity generation, costs and CO2 emissions," Energy Policy, Elsevier, vol. 61(C), pages 230-237.
    10. Jennings, Mark & Ó Gallachóir, Brian P. & Schipper, Lee, 2013. "Irish passenger transport: Data refinements, international comparisons, and decomposition analysis," Energy Policy, Elsevier, vol. 56(C), pages 151-164.
    11. Brand, Christian & Anable, Jillian & Tran, Martino, 2013. "Accelerating the transformation to a low carbon passenger transport system: The role of car purchase taxes, feebates, road taxes and scrappage incentives in the UK," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 49(C), pages 132-148.
    12. Leinert, Stephan & Daly, Hannah & Hyde, Bernard & Gallachóir, Brian Ó, 2013. "Co-benefits? Not always: Quantifying the negative effect of a CO2-reducing car taxation policy on NOx emissions," Energy Policy, Elsevier, vol. 63(C), pages 1151-1159.
    13. Zimmermannova, Jarmila, 2012. "Ex-post analysis of impacts of the car registration fee in the Czech Republic," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 46(9), pages 1458-1464.

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