Public policy directed at reducing carbon emissions from the private transport sector have focussed on the use of subsidies to lower the cost of buying or owning electric vehicles (EVs). While these subsidies are usually well intentioned, they typically ignore the carbon cost of producing a new vehicle, and typically provide financial relief to those who do not urgently need it. The recent (May 2017) proposal by the Greens (Tasmania) to waive mandatory state registration/insurance fees for EV owners is an example of such a scheme.
An alternative scheme that promises to achieve the same aims, would be to provide registration/insurance relief to drivers who keep their cars on the road for longer. Such a scheme will increase the demand for older vehicles, and decrease the demand for new ones, and is similar (but superior) in concept to recycling. Ordinarily, once a car is of an age that reduces its value to less than the cost of basic repairs, the owner becomes reluctant to invest in those repairs and maintenance. This leads to vehicles being scrapped that could be kept on the road without too much difficulty. By providing registration/insurance relief, drivers of older vehicles will be encouraged to extend the life of their vehicles.
The additional social benefit of this proposed scheme, is that the primary benefactors will be people on low incomes, who generally drive older vehicles. New energy schemes, like subsidised solar, carbon credits for land owners, or tax relief for purchasers of luxury EVs (California) have provided benefits to wealthy citizens that are out of reach for low income earners. A scheme that is not only effective, but which benefits lower income earners would thus be doubly advantageous.
The registration/insurance relief could be structured similarly to the below example:
• 4 cylinder vehicles 15-20 years old: 33% discount
• 4 cylinder vehicles 21-25 years old: 66% discount
• 4 cylinder vehicles >25 years old: 100% discount
(only vehicles of GVM 1750 kg or less to qualify for discount)
As well as introducing a scheme aimed at increasing the life time of older vehicles, the production and purchase of new vehicles can be discouraged by an increase in stamp duty, or imposition/increase of import tariffs on new vehicles (since there will soon be no major domestic car production in Australia). Revenue from this measure would help off-set revenue losses from the discounted registration/insurance fees for older vehicles.