1. Well-To-Wheel Fiscal Systems
Can they accelerate the introduction of alternative fuels?

2. Research question & main conclusions
Can WTW-based fiscal systems accelerate the introduction of alternative fuels?
Introduction of some alternative fuels may be accelerated
The competitive position of biofuels improves
The competitive position of CNG is similar
The competitive position of zero-emission vehicles deteriorates
WTW-based systems are feasible…
…however administratively complex
WTW-based systems produce undesired side-effects…
A shift to diesel vehicles may be expected
Passenger car travel demand may increase

3. Content INTRODUCTION What is the existing system and why change it?
FEASIBILITY WTW-based systems can provide a feasible alternative for the existing system
ALTERNATIVE FUELS WTW-based systems provide a fiscal incentive for other alternative fuels than the existing system
SIDE-EFFECTS WTW-based fiscal systems introduce side-effects and impact policy goals other than alternative fuels

4. DIFVER
A. INTRODUCTION

5. A. INTRODUCTION
Fiscal policy can help to tackle the challenges that the transport sector faces
CHALLENGES
CO2 emissions lead to climate change
Increasingly constrained supply of fossil fuels
OPTIONS
Reduction of transport volume
More efficient vehicles
Alternative, lower-carbon fuels
POLICY INSTRUMENTS
CO2 standards (Reg 443/2009/EC)
6% CO2 emission reduction (FQD; Dir 2009/30/EC)
Mandatory ren. energy share (RED; Dir 2009/89/EC)
National obligations & subsidies
FISC. POLICY
Within this context, fiscal policy can accelerate the introduction of alternative fuels

6. The fiscal system has gradually become ‘greener’, with effect on sales
A. INTRODUCTION
The fiscal system has gradually become ‘greener’, with effect on sales
2007
2009
2008
Sales by energy label
Bonus/malus energy labels
CO2 charge (‘slurptax’)
Exemption BPM/MRB
2008-…
> Changes required to prevent tax income decline
Source: Ecorys (2011), Fiscale stimulering (zeer) zuinige auto’s

7. A. INTRODUCTION
The existing fiscal systems already includes elements that are based on (TTW) emissions
Current forms of taxation related to private passenger cars
Tax base
Levied…
Registration tax (BPM)1), 2)
Fuel type
TTW CO2 emissions
…once, upon registration
Ownership tax (MRB)3)
Deadweight
…periodically (yearly, quarterly, monthly)
Excise duty (“accijns”)
…at point of fuel sales
1) The replacement of the list price component by the CO2 based component has been assumed complete.
2) The discount for diesel vehicles emitting less than 5 mg of PM10 per kilometre has been ignored in this study.
3) In addition, the MRB differs per province.
Note: Value-added tax (BTW) applies to vehicle and fuel. It is left unchanged and is therefore omitted here, but is included in all results.
> This study has investigated how WTW-elements can be introduced

8. Calculation of WTW-emissions in the context of this study
A. INTRODUCTION
Calculation of WTW-emissions in the context of this study
Calculated JRC, Concawe, EUCAR (2007) - Well- from: to-Wheels Analysis of Future Automotive Fuels and Powertrains in the European Context
and: ECN/PBL reference projections
Derived from: JRC, Concawe, EUCAR (2007) - Well-to-Wheels Analysis of Future Automotive Fuels and Powertrains in the European Context

9. A. INTRODUCTION
Introducing WTW-elements can make the polluter pay and prepares the fiscal system for the future
Note: Based on the emissions of a new, medium-sized, average efficiency passenger car

10. A. INTRODUCTION
The proposed changes in the Autobrief influence some of the conclusions in the present study
> Impacts highlighted where relevant > Work in progress

11. DIFVER
B. FEASIBILITY

12. Any fiscal system meets a number of challenges
B. FEASIBILITY
Any fiscal system meets a number of challenges
Passenger car travel demand
Competitiveness freight sector
Energy use zero-emission vehicles
Multiple production pathways
Refuelling abroad
Secondary fuel use in multifuel vehicles
Alignment with existing law and regulations
Government income

13. Unless tariffs (and brackets) are adapted, tax revenue will decline substantially
Tax revenue in 2010, 2020 and 2030 in the three systems

14. B. FEASIBILITY
Feasibility fully WTW-based system questionable, two alternatives have been designed
Properties of the existing and alternative systems
Existing system
Alternative 1
Alternative 2
Tax base BPM/MRB
TTW g/km
Fuel specific
WTW g/km
Generic
Tariff structure BPM/MRB
Progressive with exemption
Progressive, no exemptions
Lower tariffs to compensate for higher excise duty tariffs
Tariffs excise duty
Separate tariffs for all fuels
Single tariff (g/km WTW), based on average over all fuels
Single tariff (g/km WTW), based on current petrol tariff

15. DIFVER
C. ALTERNATIVE FUELS

16. C. ALTERNATIVE FUELS
Three groups of alternative fuels have been analysed for an average user
FUELS
Gaseous fuels
CNG
Biogas
Liquid biofuels
E85
Biodiesel
Zero-emission vehicles
PHEV*
BEV
FCV
VEHICLE & USE
Vehicle
New
Average efficiency
Use
15,000 km/yr
COSTS
Purchase costs**
Vehicle costs (incl. VAT)
BPM
Ownership costs
MRB
Use costs
Fuel costs
Excise duty
VAT
* PHEVs are only truly zero-emission vehicles when operated in all-electric mode.
** Fully depreciated over 8 years.

17. Gaseous fuels: Similar position for CNG, position biogas improves
C. ALTERNATIVE FUELS
Gaseous fuels: Similar position for CNG, position biogas improves
CNG is cheaper than petrol in all systems
Alternative 1 provides slightly stronger incentive than existing system
Alternative 2 provides similar incentive as in existing system
Biogas is cheaper than CNG in the alternative systems
In the existing system, biogas is approx. as expensive as petrol
In both alternative systems, biogas is cheaper than CNG
Biotickets make biogas cheaper than petrol in all systems
Autobrief: Higher excise duties do not change conclusions
Fuel costs are a relatively small share of total costs of gaseous fuels

18. C. ALTERNATIVE FUELS
Liquid biofuels : Position significantly better in the alternative systems
E85 and biodiesel are cheaper than conventional fuels in both alternative systems
There are no fiscal incentives for liquid biofuels in the existing system
Low taxation compensates for high fuel costs in the alternative systems
Including biotickets changes the picture
In the existing system, biotickets lower the costs of liquid biofuels to the level of conventional fuels
In the alternative systems, biotickets lower the costs of liquid biofuels even further

19. C. ALTERNATIVE FUELS
Zero-emission vehicles: Fiscal incentives strongest in the existing system
ZEVs (almost) cost competitive in the existing system
ZEVs are exempt from taxation
Only BEVs are cost competitive in the alternative systems
Higher taxation renders PHEVs more expensive than petrol vehicles
Expected cost decreases >> ZEVs cheap future option
Very efficient conventional vehicles compete with ZEVs
Currently, very efficient conventional vehicles are cheaper than ZEVs
In the future (2030), approximately equally expensive
Adjustments proposed in the Autobrief change conclusions
PHEV (in our analysis) no longer meets MRB exemption limits
Very efficient vehicles more expensive than ZEVs in the future

20. DIFVER
D. SIDE-EFFECTS

21. D. SIDE-EFFECTS
The alternative systems may lead to side-effects and impact on other policy goals
More favourable position for diesel vehicles in alt. systems can lead to an increase of diesel share in the veh. stock
Substantial tariff increases will be required in all systems to keep tax revenue stable
MRB tax burden shifts to older vehicles in alt. systems
Passenger car travel demand may increase (esp. Alt. 1)
The impact on security of supply is limited
Both alternative systems are administratively complex
Effects on air quality are uncertain

22. DIFVER
conclusions

23. CONCLUSIONS
WTW-based fiscal systems provide a stronger fiscal incentive for some alternative fuels…
WTW-based systems seem to provide a feasible alternative for the current system
WTW-based systems stimulate different alternative fuels than the existing system, more in line with ‘polluter pays’
The alternative systems provide a (much) stronger incentive for biofuels
The attractiveness of CNG is similar across all systems, the attractiveness of biogas is better in the alternative systems
The existing system provides a stronger incentive for zero-emission vehicles

24. …but come with some side-effects and caveats
CONCLUSIONS
…but come with some side-effects and caveats
A shift to diesel vehicles can be expected in the alternative systems
The incentive for very efficient conventional vehicles is about equal to the incentive for alternative fuel vehicles
But Autobrief adjustments will mitigate this issue
The alternative systems…
…may increase passenger car travel (alternative 1)
…are administratively complex
…have uncertain effects for air quality

25. CONCLUSIONS
The changes announced in the ‘Autobrief’ alter some of the original study conclusions
Very efficient conventional vehicles are no longer tax exempt, and are therefore more expensive than BEVs, FCVs, and PHEVs
MRB tax burdens for vehicles with relatively low emissions are higher (between the new and old exemption limits)
Costs for CNG and E85 vehicles in the alternative systems are higher

26. DIFVER
ADDITIONAL SLIDES

27. Calculation of WTW-emissions in the context of this study
BACKUP SLIDES
Calculation of WTW-emissions in the context of this study
Calculated JRC, Concawe, EUCAR (2007) - Well- from: to-Wheels Analysis of Future Automotive Fuels and Powertrains in the European Context
and: ECN/PBL reference projections
Derived from: JRC, Concawe, EUCAR (2007) - Well-to-Wheels Analysis of Future Automotive Fuels and Powertrains in the European Context

28. BACKUP SLIDES
Tax revenue is kept stable by adjusting tariffs and tax brackets to efficiency improvements

29. BPM tariff structure in the three fiscal systems
BACKUP SLIDES
BPM tariff structure in the three fiscal systems
Existing system
Alternative 1
Alternative 2

30. MRB tariff structure in the three fiscal systems
BACKUP SLIDES
MRB tariff structure in the three fiscal systems
Existing system
Alternative 1
Alternative 2

31. Excise duties in the three fiscal systems
BACKUP SLIDES
Excise duties in the three fiscal systems

32. BACKUP SLIDES
The graphs on the next slides can be interpreted in the way illustrated below
Costs considered in the scope of this study

33. BACKUP SLIDES
The position of CNG is better than in the existing system in Alternative 1, similar in Alternative 2
User costs for CNG in the three fiscal systems
-15%
-22%
-13%
Use (additional 7500km)
Use (7500km)
Ownership
Purchase

34. BACKUP SLIDES
FFVs (using E85) are more attractive from a cost perspective in the alternative fiscal systems
User costs for FFVs in the three fiscal systems
+7%
-26%
-1%
Use (additional 7500km)
Use (7500km)
Ownership
Purchase

35. BACKUP SLIDES
Biodiesel is more attractive (from a cost perspective) in the alternative fiscal systems
User costs for 100% biodiesel in the three fiscal systems
+5%
-25%
-4%
Use (additional 7500km)
Use (7500km)
Ownership
Purchase

36. BACKUP SLIDES
Fiscal incentives for zero-emission vehicles are strongest in the existing system
User costs for zero-emission vehicles in the three fiscal systems
Use (additional 7500km)
Use (7500km)
Ownership
Purchase

37. BACKUP SLIDES
Expected cost reductions will make zero-emission vehicles attractive options in all fiscal systems
Expected user costs for zero-emission vehicles in the three fiscal systems in 2020
Use (additional 7500km)
Use (7500km)
Ownership
Purchase

38. BACKUP SLIDES
Incentive for very efficient vehicles approximately similar to incentive for alternative fuels
Expected user costs for vehicles 40% more efficient than average in the three fiscal systems in 2030

39. BACKUP SLIDES
More favourable position for diesel vehicles in alt. systems can lead to an increase of diesel share
User costs for conventionally fuelled vehicles
Currently, ~80% of vehicle stock are petrol vehicles

40. BACKUP SLIDES
The alternative systems produce fairer tax burdens with respect to CO2 emissions
Tax burden in relation to CO2 emissions [g/km]

41. D. SIDE-EFFECTS
Substantial tariff increases will be required in all systems to keep tax revenue stable
Indexation of tariffs required to keep tax revenue stable (2010 = 100)

42. BACKUP SLIDES
Diesel is the cheapest option in the alternative systems, irrespective of annual distance
User costs by annual distance for the three fiscal systems
Existing system
Alternative 1
Alternative 2

43. BACKUP SLIDES
Average annual distance of private passenger cars in the Netherlands is km per year
Breakdown NL vehicle stock by annual distance
Source: ECN/PBL reference projections

44. The alternative systems take WTW-emissions of CNG into account
BACKUP SLIDES
The alternative systems take WTW-emissions of CNG into account
Differences in user costs between the three fiscal systems for different production pathways for CNG

45. The alternative systems take WTW-emissions of E85 into account
BACKUP SLIDES
The alternative systems take WTW-emissions of E85 into account
Differences in user costs between the three fiscal systems for different production pathways for E85

46. The alternative systems take WTW-emissions of biodiesel into account
BACKUP SLIDES
The alternative systems take WTW-emissions of biodiesel into account
Differences in user costs between the three fiscal systems for different production pathways for biodiesel

47. BACKUP SLIDES
The very low MRB exemption limit impacts the MRB structure in the new analysis
MRB structure in the original and new (including ‘Autobrief’ changes) analyses