Budget 2015: Clampdown on big emitters in green vehicle drive

Changes to the Carbon Emissions-based Vehicle Scheme should encourage the drive towards more environmentally sound vehicles while punishing the big emitters.

The changes, effective from July, mean fewer cars will get rebates while the surcharges on less "green" vehicles will be much heftier.

Many motor traders had felt the two-year-old scheme was too lax and had anticipated the alterations announced yesterday.

Car dealer and taxi operator Neo Nam Heng said: "Even big and luxurious cars from Mercedes-Benz, Audi and BMW are entitled to rebates. I don't think that was the intent of the scheme."

Finance Minister Tharman Shanmugaratnam said nearly two-thirds of new cars registered last year qualified for rebates, which ranged from $5,000 to $20,000 for cars and $7,500 to $30,000 for taxis.

And only 5 per cent attracted surcharges. The rest were in the neutral band, attracting neither incentives nor disincentives.

"By tightening the scheme, the Government will encourage really green vehicles," Mr Neo said.

Under the revised scheme, cars and cabs must emit no more than 135g/km of CO2 to qualify for a rebate - down from 160g/km previously.

The new maximum rebate will be $30,000 for cars and $45,000 for cabs if they emit no more than 95g/km of carbon. The top rebates now are $20,000 for cars and $30,000 for cabs that emit no more than 100g/km of carbon.

Electric cars, petrol-electric hybrids and diesel models will be among those that qualify for the revised top-tier incentive.

But more cars will attract penalties from July, starting with those that emit more than 185g/km of CO2. This is down from the cut-off of 210g/km now.

The $5,000 surcharge will apply to the Audi A7, Honda Odyssey, Porsche Boxster, Lexus ES250 and Volvo S60 T5, among others.

Vehicles that will incur the heftiest surcharge of $30,000 ($45,000 for cabs) include the Volvo XC90, Ferrari 458 and Rolls-Royce Wraith.

Asian Clean Fuels Association executive director Clarence Woo said: "The world over, countries are looking at improving fuel efficiency. The question is whether the auto industry can produce better and better engines."

The European Union, for instance, is aiming to achieve a fleet average of 130g/km by this year and 95g/km by 2021.

New green policies good but bring back diesel duty at pumps too

There are few better ways to motivate people to go green than through the colour of money.

Thus, the higher petrol duty and tightened Carbon Emissions-based Vehicle Scheme (CEVS) are, in principle, effective environmental policies.

The 15-20 cent/litre increase in petrol duty came into effect yesterday, while the revised CEVS - with bigger carrots and bigger sticks - will kick in from July.

The former is supposed to persuade motorists to drive judiciously and to plan their routes before they set off. The latter aims to encourage car buyers to pick more carbon-efficient models.

Working in tandem, the two policies announced by Finance Minister Tharman Shanmugaratnam in his Budget speech yesterday should lead to cleaner air for everyone.

If drivers could reduce their mileage by just 10 per cent, Singapore would cut carbon dioxide emissions by 210,000 tonnes a year. And if the average carbon emissions per car were reduced by a mere 20g/km, the country could cut down on such emissions by 234,000 tonnes a year.

That's a combined total of 444,000 tonnes of carbon reduced every year, not to mention commensurate cuts in toxins such as particulate matter, nitrogen oxides and benzene.

The figures are based on a car population of 650,000, an average mileage of 18,000km, and an assumed average carbon emission of 180g/km per car.

But the outcome could be even more promising if a few other related changes were made.

One is the re-introduction of diesel duty at the pumps.

Right now, the various diesel users each pay their respective duties upfront annually. This was meant to be a business-

friendly initiative by capping duty payable. But what is good for business is bad for the environment.

Because they don't feel the pinch as they pay, diesel users do not see the need to curb wasteful behaviour, such as leaving engines running while stationary - even though this is illegal - or over-revving.

It is common to see taxis, delivery vans or buses spewing exhaust while they are parked.

And other road users know when a diesel vehicle is being driven hard, when they are left in the trail of black smoke.

Diesel is also the culprit in bootleg sales. Once the diesel pump duty was removed in 1998, "white pumps" selling non-branded fuel proliferated.

Anecdotal evidence suggests that fuels sold at these pumps do not meet the low-sulphur requirement in place here.

With the new announcements, cabbies driving petrol-run taxis will face the brunt of the hike in petrol duty.

Over time, they might shun these models and revert to diesel cabs.

This would be a shame, as cab operators like SMRT and Prime Taxi have been growing their environmentally friendly petrol-hybrid fleets.

Re-introducing the diesel duty at the pumps - and pegging it to petrol rates - would level the playing field on this front, and allow petrol cabs to compete fairly with their diesel counterparts.

Meanwhile, the revised CEVS would be far more meaningful if the rebates can be used to offset road or income taxes.

As it is, end-users do not realise the full benefit of a rebate, which is bundled with a car's list price. It would be easy for a dealer to raise prices before applying the CEVS - the consumer would be none the wiser.

Also, since the CEVS is offset against a car's Additional Registration Fee (ARF), its scrap value is also reduced accordingly, so the actual savings are far less than advertised.

Not only that, it will be buyers of fairly expensive cars who enjoy the full benefit of a top-tier CEVS rebate. This is because the minimum ARF payable is $5,000, so the open market value of a car has to be $35,000 or more for the maximum CEVS rebate of $30,000 to be fully realised.

christan@sph.com.sg


This article was first published on Feb 24, 2015.
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