The tax whip and rise of a low-emission society
On the Edge: An opinion column about current issues in Norway and the United States
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Linn Chloe Hagstrøm
The Norwegian American
A favorable domestic policy environment providing tax breaks, exemptions, and waivers for electric vehicle users in combination with high taxes and fees for owners of cars running on fossil fuels has served Norway well through the past few years in reducing the number of cars owned, car usage, air pollution in major cities, and greenhouse gas emissions. Norway’s progress on the road to becoming a low-emission society can be largely attributed to pro-electric vehicle policies and high taxes on gas and diesel cars.
At the beginning of 2017, 97,500 electric personal vehicles were registered in Norway. The number of clean electric passenger cars has continued to increase rapidly. During the first quarter of 2017, the number passed 100,000 according to Statistics Norway, which also reported that “This is 41 percent more than in 2016, yet electric cars still account for only 3.7 percent of the total amount of cars in Norway.” Last year, Norway reached a milestone where electric cars made up 50 percent of the total number of new car sales, almost 10 times higher than any other country in the world. In the country of fjords, there is widely held political agreement on continuing electric car initiatives in order to reach the goal of 100 percent of all new cars purchased being emission-free by 2025.
According to the International Energy Agency (IEA), the electrification of transport plays a large role in attempting to achieve de-carbonization of the energy system, where increasing transport electrification goes hand-in-hand with de-carbonizing the electricity sector. The Electric Vehicles Initiative (EVI), of which Norway is a member, is one multi-government policy forum aimed at contributing to solving some of the many environmental challenges facing us today. The forum came into being in 2009 and was initiated by the Clean Energy Ministerial (CEM). It is dedicated to fast-tracking the distribution of electric vehicles across the globe. As of May 2017, the EVI counted 10 member governments (Canada, China, France, Germany, Japan, the Netherlands, Norway, Sweden, the United Kingdom, and the United States). According to the findings of the IEA, Norway has been the most successful globally in terms of market share (at 29 percent) in deploying electric cars, hybrids, and zero emissions vehicles (ZEVs), which are vehicles that do not emit exhaust gas from the source of power.
The major drive for Norwegians to purchase electric cars, hybrids, and ZEVs may have been, arguably, the heavy and multi-handed tax whip. The Norwegian government is whipping Norwegians into purchasing electric cars, which is great for reducing pollution levels in cities, for Norway’s journey toward achieving the benchmarks of the Paris agreement, and for private companies producing and selling electric cars on the Norwegian market. The mountain of fees owners of gas or diesel vehicles face are various, including a one-time fee, re-registration fee, traffic insurance fee, fuel surcharge, toll fees, higher ferry fares, higher parking rates and restrictions, higher income tax on company cars, and no access to public transportation lanes (HOV lanes for buses and taxis), which clogs up traffic. It has been argued that the VAT exemption for zero-emission vehicles is the only carrot given to Norwegians currently, which is not much compared to other countries.
One of the consequences of these whipping techniques has been a stark reduction in state income from road toll booths. According to NRK, new road toll systems may have to be put in place so that owners of electric vehicles will also be charged fees because of the increased number of electric vehicles in the cities. Bergen city has had the sharpest increase in total purchased electric vehicles, which can be attributed to the higher tariffs and expanded toll rings, and the fees on non-electric vehicles for driving during rush hour. In Oslo last year, diesel cars were banned from driving in the city on days with high pollution rates.
Norway’s successful 29 percent market share in 2017 was not only the result of heavy-handed tax reforms but was also influenced by the favorable policy environment that the country enjoyed over recent years. A wide range of incentives (and some would say subsidies) made purchasing electric vehicles much more attractive, including tax breaks and exemptions and waivers for road toll fees and ferry tickets or passes. Despite the various monetary benefits and positive environmental impacts of purchasing and using ZEVs, these cars are not pollution-free depending on the source of power used in their production and recharge. In 2012, for example, VG reported that electric cars that are charged with clean energy, i.e., hydropower, can reduce climate emissions by 55 to 60 percent. The climate gains for electric cars increase when cleaner electricity is used in every aspect of the process, so Norway’s hydropower makes it a perfect candidate for this type of vehicle.
Norway’s continuing progress on the road to becoming a low-emission society can be largely attributed to favorable domestic policies for electric vehicles and hybrids in combination with high taxes and fees for fossil fuel cars. Will the United States take on this challenge in the near future?
Linn Chloe Hagstrøm, the opinion editor in Ås, is currently pursuing a MSc in International Relations at NMBU. She plays on the NMBUI volleyball team and occasionally enjoys a glass of bourbon.
This article originally appeared in the Feb. 23, 2018, issue of The Norwegian American. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.