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

2. Energy research Centre of the Netherlands
Amsterdam-Sloterdijk
Petten

3. Efficiency & Infrastructure
ECN Policy Studies provides knowledge and strategies that matter for a sustainable energy future
Policy Studies
65 researchers
Backgrounds in a variety of disciplines such as social science, engineering, economics and environmental sciences
Addressing energy and climate policy challenges using quantitative tools and qualitative analysis
Solar energy
Biomass
Efficiency & Infrastructure
Wind energy 3

4. Content INTRODUCTION ALTERNATIVE FUELS SIDE-EFFECTS
CONCLUSIONS, QUESTIONS & DISCUSSION

5. DIFVER
A. INTRODUCTION

6. Fiscal policy affects both economy and environment
A. INTRODUCTION
Fiscal policy affects both economy and environment
ENV. CHALLENGES
CO2 emissions lead to climate change
NOx, PM emissions deteriorate air quality
POLICY INSTRUMENTS
CO2 norms
Fuel standards
Mandatory ren. energy share
National obligations & subsidies
‘COMMON GROUND’
NL vehicle and fuel sales,
vehicle stock & vehicle use
POLICY INSTRUMENTS
Fiscal policy
Rules & regulations for the financial sector
ECON./FIN. CHALLENGES
Budgetary balance
Strong economic structure

7. 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-…
Source: Ecorys (2011), Fiscale stimulering (zeer) zuinige auto’s

8. A. INTRODUCTION
The existing fiscal systems already includes elements that are based on (TTW) emissions
Tax base
Registration tax (BPM)1), 2)
Fuel type
TTW CO2 emissions
Ownership tax (MRB)3)
Deadweight
Excise duty (“accijns”)
This study has investigated how WTW-elements can be introduced
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.

9. A. INTRODUCTION
The relative impact of TTW-emissions is expected to decline in the future
WTT-emissions
[~15%]
TTW-emissions
[~85%]
Increase
in ratio WTT/TTW expected
Increase expected, due to
alternative fuels
(e.g. biofuels, electricity)
Decrease expected, due to
more efficient vehicles
alternative fuels

10. A. INTRODUCTION
WTW-elements make ‘the polluter pay’ and prepare the fiscal system for the future
Note: Based on the emissions of a new, medium-sized, average efficiency passenger car
Only direct emissions have been taken into account!

11. A. INTRODUCTION
WTW-elements make ‘the polluter pay’ and prepare the fiscal system for the future
The WTT-part of these
fuels may increase in
the future
The use of these fuels
will likely increase
They are barely taxed,
despite the fact they do
produce (WTT-)emissions
Note: Based on the emissions of a new, medium-sized, average efficiency passenger car
Only direct emissions have been taken into account!

12. Introducing WTW-elements prepares the fiscal system for the future
A. INTRODUCTION
Introducing WTW-elements prepares the fiscal system for the future
current fuels
expected future fuels
Note: Based on the emissions of a new, medium-sized, average efficiency passenger car
Only direct emissions have been taken into account!

13. A. INTRODUCTION
Feasibility fully WTW-based system questionable, two alternatives have been designed
Properties of the existing and alternative systems
Existing system
BPM/MRB
TTW g/km
Fuel specific
Excise duty
Separate tariffs for all fuels
WTW-elements to be introduced in all taxes

14. A. INTRODUCTION
Feasibility fully WTW-based system questionable, two alternatives have been designed
Properties of the existing and alternative systems
Existing system
Alternative 1
BPM/MRB
TTW g/km
Fuel specific
WTW g/km
Generic
Excise duty
Separate tariffs for all fuels
Single tariff (g/km WTW)
Based on average over all fuels
Difficult to establish actual WTW-emissions
Will lead to lower petrol excise duties >> increase in travel demand

15. A. INTRODUCTION
Feasibility fully WTW-based system questionable, two alternatives have been designed
Properties of the existing and alternative systems
Existing system
Alternative 1
Alternative 2
BPM/MRB
TTW g/km
Fuel specific
WTW g/km
Generic
Excise duty
Separate tariffs for all fuels
Single tariff (g/km WTW)
Based on average over all fuels
Based on current petrol tariff
‘Excess’ income compensated by lower BPM & MRB

16. A. INTRODUCTION
The proposed changes in the Autobrief influence some of the conclusions in the present study

17. DIFVER
B. IMPACT ON ALT. FUELS

18. B. IMPACT ON ALT. FUELS
Three groups of alternative fuels have been analysed for an average user
GASEOUS FUELS
CNG
Biogas
LIQUID BIOFUELS
E85
Biodiesel
ZERO EMISSION
PHEV*
BEV
FCV
* PHEVs are only truly zero-emission vehicles when operated in all-electric mode.
New vehicle
Average efficiency
15,000 km/yr

19. B. IMPACT ON ALT. FUELS
The graphs on the next slides can be interpreted in the way illustrated below
Costs considered in the scope of this study **
** Fully depreciated over 8 years.

20. B. IMPACT ON ALT. FUELS Gaseous fuels
DIFVER
B. IMPACT ON ALT. FUELS Gaseous fuels

21. B. IMPACT ON ALT. FUELS
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
Low WTW-markup leads to lower taxation
-15%
-22%
-13%
Use (additional 7500km)
Use (7500km)
Ownership
Purchase

22. B. IMPACT ON ALT. FUELS
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%
AUTOBRIEF
Higher CNG excise duties, but fuel costs minor share
> Competitive position CNG similar to original analysis
Use (additional 7500km)
Use (7500km)
Ownership
Purchase

23. B. IMPACT ON ALT. FUELS
A minimum share of biofuels is guaranteed by an obligation for fuel distributors
> 4.25%
< 95.75%
fuel distributor

24. B. IMPACT ON ALT. FUELS
Under the obligation, fuel distributors are required to supply proof of biofuel sold
biotickets
> 4.25%
biotickets
< 95.75%
fuel distributor
government

25. Biotickets are tradeable
B. IMPACT ON ALT. FUELS
Biotickets are tradeable
biotickets
biotickets
> 4.25% €
< 95.75%
fuel distributor
fuel distributor

26. B. IMPACT ON ALT. FUELS
Theoretically, the value of a biotickets equals the cost difference between conventional and biofuels
biotickets
biotickets
> 4.25% €
< 95.75%
fuel distributor
fuel distributor
NB: Biotickets only have value up to obligation share!
cost/value
petrol
bioticket
E85

27. B. IMPACT ON ALT. FUELS
Under the biofuel obligation, CNG and biogas are approx. equally expensive in the alt. systems
User costs for CNG and biogas in the three fiscal systems, including biotickets
+7%
-2%
Use (additional 7500km)
-1%
Use (7500km)
Ownership
Purchase
Note: Subsidy for the production of biogas (SDE) has not been taken into account

28. B. IMPACT ON ALT. FUELS
Beyond the obligation, biogas is more expensive than CNG in all systems
User costs for CNG and biogas in the three fiscal systems, excluding biotickets
+18%
+9%
+10%
Use (additional 7500km)
Use (7500km)
Ownership
Purchase
Note: Subsidy for the production of biogas (SDE) has not been taken into account

29. B. IMPACT ON ALT. FUELS Liquid biofuels
DIFVER
B. IMPACT ON ALT. FUELS Liquid biofuels

30. B. IMPACT ON ALT. FUELS
Even beyond the obligation, FFVs are attractive (w.r.t. costs) in the alternative fiscal systems
User costs for FFVs in the three fiscal systems
+7%
-26%
-1%
Use (additional 7500km)
Use (7500km)
Ownership
Purchase

31. B. IMPACT ON ALT. FUELS
Even beyond the obligation, biodiesel is attractive (w.r.t. costs) 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

32. B. IMPACT ON ALT. FUELS Zero-emission vehicles
DIFVER
B. IMPACT ON ALT. FUELS Zero-emission vehicles

33. B. IMPACT ON ALT. FUELS
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

34. B. IMPACT ON ALT. FUELS
However, efficient conventional vehicles have approximately equal costs
Expected user costs for vehicles 40% more efficient than average in the three fiscal systems in 2020
Other fuels/vehicles are also approximately equally expensive

35. B. IMPACT ON ALT. FUELS
However, efficient conventional vehicles have approximately equal costs
Expected user costs for vehicles 40% more efficient than average in the three fiscal systems in 2020
AUTOBRIEF
Exemption limits are lowered substantially
> Incentives for very efficient vehicles decrease
> (Relative) attractiveness of alternative fuel vehicles increases

36. c. SIDE-EFFECTS & FEASIBILITY
DIFVER
c. SIDE-EFFECTS & FEASIBILITY

37. C. SIDE-EFFECTS
The alternative systems may lead to side-effects and impact on other policy goals
Favourable position for diesel vehicles in alt. systems can lead to an increase of the share of diesel vehicles
Diesel share increase
Tariff increases
Substantial tariff increases will be required in all systems to keep tax revenue stable
Higher MRB older veh.
MRB tax burden shifts to older vehicles in alt. systems
Travel demand
Passenger car travel demand may increase (esp. Alt. 1)
Security of supply
Impact on security of supply is limited
Adm. complexity
Both alternative systems are administratively complex
Air quality
Effects on air quality are uncertain

38. DIFVER
D. conclusionS

39. D. CONCLUSIONS
WTW-based fiscal systems provide a stronger fiscal incentive for some alternative fuels…
WTW-based systems seem to provide a feasible alternative
WTW-based systems stimulate different alternative fuels than the existing system, more in line with ‘polluter pays’
Gaseous fuels
Biogas more attractive
Liquid biofuels
Much stronger incentive for all biofuels
Zero-emission
Less attractive than in existing system

40. …but come with some side-effects and caveats
D. CONCLUSIONS
…but come with some side-effects and caveats
A shift to diesel vehicles can be expected in the alternative systems
The incentive for 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

41. D. CONCLUSIONS
The changes announced in the ‘Autobrief’ alter some of the original study conclusions
Many 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 flex-fuel vehicles in the alternative systems are higher

42. DIFVER
ADDITIONAL SLIDES

43. 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

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

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

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

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

48. 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

49. 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

50. 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

51. 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

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

53. BACKUP SLIDES
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)

54. 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

55. 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

56. 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

57. 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

58. 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

59. 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