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Cash incentives best to curb dangerous emissions

Cash incentives best to curb dangerous emissions

The New Zealand Business Council for Sustainable Development says its policy to pay cash incentives to climate friendly cars buyers is firmly backed up by a new report to Europe's transport ministers.

The report was prepared by NERA, a leading London-based economic consultancy, with support from the world's leading automobile organisation, the FIA. It reviews ways to lower health and climate harming CO2 emissions by the transport sector.

The Government here is investigating a Business Council proposal backed by six out of 10 New Zealanders in nationwide polling to pay cash incentives of up to $3000 to buyers of low emission, fuel efficient cars.

The report to the European Council of Transport Ministers, reviewing measures taken in Europe and worldwide, says improving vehicle fuel efficiency through fiscal incentives ranks third among the most effective in cutting CO2 emissions.

"There is considerable potential for differentiating vehicle taxes in more countries, improving the basis for differentiation, increasing the range of vehicles subject to incentives and increasing the size of the incentives created," the report says.

It also says there are huge gains to be made from teaching people to drive in fuel efficient ways, and vehicle taxes could be effectively based on fuel and emission efficiency, rather than engine displacement or power or weight.

Business Council Chief Executive Peter Neilson says transport in New Zealand is pumping more than 14 million tonnes of CO2 equivalent into the air each year, the second biggest greenhouse gas emission behind agriculture.

The vehicle emissions are causing 970 people over the age of 30 to die prematurely each year.

"Incentives to choose fuel efficient, low emission cars are about to be introduced federally in the United States. Lower taxes or other incentives for these vehicles are in place in the some US states, the United Kingdom and throughout Europe.

"While higher fuel prices are also an incentive to buy more fuel efficient cars, as we are seeing in the latest New Zealand small car sales figures, they're not enough on their own.

"Petrol will need to hit $4 a litre here before we see a significant switch to climate friendly cars. Even at current petrol prices, the rise in small car sales to a rate of about 16,608 a year won't achieve any rapid or big change. That means just 83,000 smaller cars will be sold over the next five years. With cash incentives, our research shows 430,000 fuel efficient, low emission cars not just small ones could enter the national fleet over the next five years.

"Yes, some people are buying small cars and that's fine. But other people need help. We need to ensure climate friendly cars which include everything from a hybrid to the latest diesel powered BMWs and Audis and XJ Jaguar are made viable for companies to buy. They are then passed on through the fleet. And we need a disincentive to slow down the importation of new and used cars from abroad which wouldn't be allowed on the roads in Japan, Europe or the United States," Mr Neilson says.

The cash incentives policy will cost the Government $103 million a year.

The Business Council says the pay back will be significant for the Government. It will improve air quality, quality of life, help cut a $400 million a year health bill for treating people whose respiratory and other conditions are aggravated by petrol particle pollution, and cut the death toll from petrol pollution, running at more than double the road toll.


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