1. Subsidies for Cleaner Transport Vehicles
EU Air quality policies
Subsidies for Cleaner Transport Vehicles
Jacques Delsalle, DG Environment

2. In short Economic background EU Policy An example (France) Next...
Workshop on Buses and urban captive fleets, 14/1/2005, Brussels

3. Background (1)
Avoid unduly distortion of competition in internal market
Producer subsidy different from other market interventions such as consumer subsidies or taxes.
Other elements of distortion not linked with government intervention
Avoid harmful effects
Over-production or harvesting of the subsidised product,
Creation ‘economic rents’
PS lowers the cost of production of a producer, or raises the price received by the producer

4. Background (2)
Subsidies can be justified in the context of stimulating technological change: e.g. clean vehicles
Reduce the risks inherent in not knowing how costs will decline as output expands.
Focus subsidies on capital costs
Ensure a powerful technology stimulus.
Update regularly the evaluation basis
Strong time-limits on the availability of the subsidy
Perform an extended Cost-benefits analysis

5. EU Policy on environmental subsidies
Guidelines on State aid for environmental protection
OJ C37/3 of
Allow State aid when necessary to ensure environmental protection and SD without having a disproportionate effect on competition and growth.
Expire at the end of Revision start in 2005
Environmental Technologies Action Plan (COM(2004) 38)
General policy objective of the EU to advance sustainable development by the removal or reform of environmentally-harmful subsidies
(Broad Economic Policy Guidelines, 6th Environmental Action Programme, Sustainable Development Strategy, etc.)
OECD (Workshop on environmentally-harmful subsidies – policy issues and challenge, 2002)
Putting this general rule into operational practice.

6. ADEME, “Dispositif d'aides aux véhicules propres et économes »
French experience
ADEME, “Dispositif d'aides aux véhicules propres et économes »
a wide range of subsidies
Passenger cars, Buses, HGV, Waste collection, etc.
New vehicles & Retrofit (DPF)
Up to € / vehicle
Limits in time and number of vehicles

7. Results Success stories Some failures (e.g. LPG passenger cars)
Natural Gas Buses
Subsidy = 20% over-cost
Now 8% of the fleet, 30% market new buses
Strong co-operation with operators, vehicle and fuel producers
Impact support public authorities on image
“100 electric buses”, Natural Gas Waste collection
Some failures (e.g. LPG passenger cars)
Image?
New developments:
DPF trucks (subsidy + fiscal incentives linked with env performance)
Electric light trucks urban freight : 10 pilot cities

8. Evaluation of environmental and economic performance
Updated every 2 years (last: October 2004)
Builing a sound basis for:
Comparing technologies and identifying better options
Discussing with operators and providers (start-up problems)
Building sound evolution scenarios
Defining the subsidies for developing the most promising technology options

9. Environmental performance
Source: ADEME

10. Multi-Criteria analysis
Source: ADEME

11. More…
ADEME:
Contact : Patrick Coroller
Workshop on potential EU policies to improve the contribution of urban buses and other captive fleets to urban air quality 
Brussels, 14 January 2005
Contact : Jacques Delsalle