The choice of new private and benefit cars vs. climate and transportation policy in Sweden

Abstract

Dedicated to show climate leadership, Sweden has committed to cut 70% of greenhouse-gas (GHG) emissions in the domestic transportation sector by 2030 compared to 2010 levels (except flights). This study evaluated the environmental impacts of three recent new car policies. Based on questionnaires and market supply data, multinomial logit discrete choice models were developed for private buyers and individuals with company cars for private use, denoted benefit cars. Estimates indicated that preferences among individuals with benefit cars were generally in favor of Alternative Fuel Vehicles (AFVs) as compared to gasoline cars, in contrast with private consumers (ceteris paribus). Thus, the company car market seemed to be the main gateway for AFVs into the fleet; however, average GHG emissions per car sold were similar in both buyer segments, which was likely related to stronger preferences for larger and more expensive benefit cars. The results indicated that subsidies to private buyers would be influential only if they decreased the costs of AFVs as compared to conventional vehicles, and that none of the investigated policies had been very effective in shifting choices in favor of AFVs. Reduced fringe benefits tax for AFVs, annually worth up to €1100, resulted in only 0.7% lower average carbon emissions. A ‘Super Green Car’ premium, worth approximately €2000–€4000 at the time of purchase, decreased emissions by 0.4% among private consumers, twice the impact of a five-year tax-exemption for ‘Green Cars’. It appears that more stringent policies are needed to more substantially reduce GHG emissions from new cars.