Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2016:19: Car fleet policy evaluation: the case of a Bonus-Malus system in Sweden

Shiva Habibi (), Muriel Beser Hugosson (), Pia Sundbergh () and Staffan Algers ()
Additional contact information
Shiva Habibi: Chalmers, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Muriel Beser Hugosson: KTH, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Pia Sundbergh: Trafikanalys, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Staffan Algers: KTH, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: The car fleet composition is important from several aspects including energy consumption, greenhouse gas and other emissions. Evaluation of car fleet policy measures is therefore vital for choosing among different car policy options. In this paper, we demonstrate how such an evaluation could have been carried out in the context of the Swedish governmental investigation of a fossil free car fleet, released early 2014. One objective of the policy package is to design a Bonus-Malus system that pushes the Swedish fleet composition towards the EU objectives of the average CO2 emissions for new cars by 2021. The proposed scenarios address cars bought by private persons as well as by companies. These scenarios differ in designs for registration tax, vehicle circulation tax, clean car premiums, company car benefits tax and fuel tax. We use the Swedish car fleet model system to predict the effects of the proposed scenarios on the Swedish car fleet composition. Also, we build a simple supply model to predict future supply. Our model results show that none of the three proposed scenarios is actually successful enough to meet the Swedish average CO2 emissions target. The average CO2 emissions in two of these scenarios are actually not much different from the business as usual scenario. In all scenarios, the number of electric and plug in hybrid cars increase. However, in all scenarios, the car fleet will still be totally dominated by fossil fuelled cars. Also, relative to a business as usual scenario the number of ethanol and gas cars is reduced in the other scenarios. Also, the Bonus-Malus system gives a positive net result in terms of budget effects showing that car buyers choose to pay the malus for a car with higher emissions rather than to be attracted by the bonus of a car with lower emissions.

Keywords: Bonus-Malus; Taxation policies evaluation; Car fleet modeling; Vehicle supply model

JEL-codes: R40

29 pages, September 27, 2016

Note: This paper replaces CTS Working Paper 2015:6 "Evaluation of bonus-malus systems for reducing car fleet CO2 emissions in Sweden"

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