With the most recent alarming report on climate change from the Intergovernmental Panel on Climate Change (IPCC), governments are once again faced with the question of how to develop policies to address the climate crisis. The IPCC says that the unrestricted use of fossil fuels must be phased out by 2100. For some governments, like in the United States, the challenge lies in just getting the public to agree there is a problem. But even in the European Union (EU), where there is broad consensus on the need for action, it can be challenging to convert this into policies that will successfully drive down greenhouse gas emissions.
One challenge is setting appropriate and achievable targets based on clear-headed analysis, not wishful thinking. Another challenge is then devising the right mix of carrots and sticks to allow the goal to be met.
The Right Place
The Netherlands’ electromobility initiative is one example of how to develop and implement an environmental policy effectively. I recently had the chance to talk with a delegation from the Netherlands about the country’s push to promote plug-in vehicle (PEV) adoption and its successes to date. The first and most critical step was recognizing that the country had the right conditions for PEV adoption. The Netherlands is a small country, densely populated and highly urbanized. The Dutch tend to be environmentally conscious already, and the country has an extensive and stable grid network (fueled mostly by fossil fuels but with around 15% renewables). The country also has some of the highest gas prices in Western Europe, thanks in part to the highest fuel tax in the EU.
Given these conditions, the government’s belief that PEVs could find success was well-founded. The government has set a goal of having 200,000 PEVs in the Netherlands by 2020. According to Navigant Research’s report, Electric Vehicle Market Forecasts, total light duty vehicle (LDV) parc (i.e., vehicles in use) in the country will be 8.6 million in 2020. Two hundred thousand PEVs would be 2.3% of the total vehicles on the road. That may seem small, but it’s actually an aggressive target, requiring PEVs to average more than 5% of annual LDV sales over the next 6 years. According to Navigant Research’s PEV forecasts, only Norway, Estonia, and the Netherlands have broken 1% annual PEV sales as of 2014.
The Dutch government offers significant tax incentives for PEV purchases, PEV leasing, and EV charging equipment installation. The PEV purchase tax rebate amounts to around €7,000 to €10,000 ($8,700-$12,500). Perhaps more important, however, is the income tax relief on private use of a company car. A significant number of cars in use in the Netherlands are company cars or cars leased for company use. PEVs were exempt from the income tax, saving drivers as much as $5,000 annually.
At the same time, the Dutch government provides incentives for EV charging station deployment, for public and workplace use especially. As of October 2014, there were more than 9,500 public charging points in the Netherlands. The effort to roll out infrastructure is supported by Dutch energy and grid companies.
The policies have worked: as of 2014, annual PEV sales in the Netherlands amount to 4% of total LDV sales, and there are a total of more than 32,000 PEVs on Dutch roads. Moreover, Navigant Research forecasts that the country will actually reach the 200,000 PEV goal by 2019, a year early.
The next phase for the electromobility initiative will see it moving beyond the early PEV adopter phase and promoting further EV charging station workplace and public deployments. The country’s next target – 1 million PEVs by 2025 – will be a challenge to reach. But the Dutch have proven that progressive policies can truly shift the vehicle market.
Tags: Carbon Emissions, Clean Transportation, Electric Vehicles, Europe, Policy & Regulation, Smart Transportation Program
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