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Ineffective support to green cars

Despite the lack of adequate cost-benefit analysis and environmental impact assessments, the Government has invested several billion kronor to increase the share of green cars. The Swedish National Audit Office audit shows that this has been relatively costly and ineffective in reducing the CO2 emissions of the transport sector.

Electric car charging.

Photo: Stefan Schweihofer

The Swedish NAO has audited the policy instruments used since 2006 to increase the share of green cars in Sweden*. In total, central government expenditure has been in excess of SEK 13 billion.

The overall conclusion is that compared to other policy instruments in the same area, this has been a relatively costly way to reduce the CO2 emissions of the transport sector.

The Swedish NAO also notes that many subsidised green cars have been exported, which further reduced the cost effectiveness. The cost effectiveness of the measure is also negatively affected by the fact that people who have company cars for private use via their jobs receive a significantly higher subsidy than those who choose to buy a green car privately. In addition, a disproportionately large part of the subsidy has gone to metropolitan regions

“In relation to other measures in the transport area, such as carbon tax or some measures in the Climate Investment programme, the costs to society for climate bonus cars are high as things stand now,” says Cecilia Kellberg, Project Leader for the audit.

Furthermore, the Swedish NAO is critical of the fact that no overall cost-benefit analysis has been developed for any of the measures audited, where the benefit of the measure is set against costs, or cost-effectiveness assessments made - as required by the Government’s own guidelines for the implementation of reforms.

In addition, the basis for decision only contains scant information on the environmental consequences, although the aim of the measures has been to reduce emissions in the long term, in particular of carbon dioxide.

Most of the measures also lack any plan for follow-up and evaluation.

“The Riksdag has made it clear that measures to reduce the climate impact of the transport sector must be economically and environmentally effective. The audit shows that these policy instruments do not live up to this,” says Auditor General Helena Lindberg.

A further shortcoming has been the disjointedness that has characterised the use of the policy instruments in question, with recurring regulatory changes and limited advance planning, which counteracted long-term and predictable conditions for private individuals and businesses

“Uncertainty about future regulations, charges and taxation for passenger cars could lead to high costs for consumers. For example, individuals might be tempted to buy a certain type of car which, after a few years, would be unexpectedly expensive to own,” says Cecilia Kellberg.

Recommendations

In brief it is recommended that the Government:

  • ensures that analyses are prepared, above all of environmental and socio-economic consequences, before decisions in this area
  • compares the socio-economic costs of alternative policy instruments in order to ensure a economically efficient climate and transport policy
  • reviews the possibilities of reducing the socio-economic costs of exporting subsidised green cars
  • analyses cost efficiency of the reduced taxable benefit targeting green company cars for private use
  • clearly states how long the bonus-malus system is to apply and how it will be developed in the future, and how long the temporary reduction in the taxable benefit for electric and gas cars is to apply.

See the report for the full recommendations.

*The measures audited are the bonus-malus system, the CO2 differentiated motor vehicle tax, the reduced taxable benefit for green cars and the previous policy instruments, the super green car rebate, the green car rebate and the five-year exemption from motor vehicle tax.

Press contact: Olle Castelius, phone: +46 8-5171 40 04.

Presskontakt: , telefon: 08-5171 42 06.

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Updated: 22 April 2020

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