I bought an electric car. Tax payers are subsidising me. And it is all wrong.

I ran for Parliament in 2005. I wrote in a leaflet, that solving climate change is easy. (not to be confused with cheap). Because it is (in the big picture). You decide amount of emissions permitted at each time, and auction off quotas to emit. And net sequesters (those who take carbon away) can sell the right to emit same amount of carbon. In the EU we have one of the largest such systems. It covers half the economy. An alternative to these quotas are a tax – both are named a carbon price. Any carbon price scheme should cover as much as possible, because it doesn’t matter who emits, where or why. Only the net sum matters.

So how should that work when I would buy a car? There should not be tax difference when buying or owning a car. A car standing still does not emit. The carbon price should be on the ”fuel”. The benzin/gas/petrol/diesel (after all, you know how much CO2 the burning of it gives). For electric cars the climate friendliness is completely dependent on the source of electricity. If you tax it as just electricity consumption, you get this right. It is even worse for hybrids where, the greenness of the car depends on the fuel mixture. And that is the beauty of the carbon price. Nobody needs to think about whether it is green or not. The policy of the quotas/tax ensures we reach the goal, and whether individual consumption choices are climate friendly or not, doesn’t matter. When you pollute you pay. And the price automatically adjusts itself to be high enough so the total emissions hit the target, which will go to zero by 2050.

How does it work in practice? My car was bought in Denmark, but I don’t think the craziness is unique. Well, first there is a ”registration tax” on cars in Denmark on 100% (that is uniquely crazy, and is due to the fact that there is no car production in Denmark. It is bad old protectionism. That tax is 0 for electric cars. While the tax is crazy, so is the discount. Again, cars not driven do not pollute (and if anything the production of the car itself might be worse for the electric ones). With a very round number, let us assume I save 10.000 EUR in tax. I don’t think it a bad guess that will be 1 EUR pr liter of benzene I would ever buy in that time (maybe 180.000 km at 18 km/litre). Is that reasonable? no. A litre of gasoline produces 2.4kg of CO2 – 1/400th of a ton (chemistry afficionados will realise that in gasoline each carbon with 2.low H – molecular mass of just over 14 combined, while in CO2, with 2O’s bring the weight to 44)  – that is 5-10 times higher than the price reconned to be the right one, should the Paris agreement be kept (40-80 USD McKinsey estimates in 2020). But that is just the subsidy of buying. But the fuel is already taxed in Denmark by at least that amount. So therefore the tax shouldn’t be different at all, even on current fuel tax rules.

And adding more craziness on top. Electricity production, in contrast to transportation is included in the EU quota system. Even so, I get something in line of 0.15 EUR back in taxes per kWh I use for the car. Even if it absolutely means nothing for the climate, whether I use my electricity at home for attending AIM meetings, mowing my lawn, or charging the car.

Fun fact: In 2019 election then opposition of the left promised 0.5 million electric cars on the road (by 2030?). The liberal government, decided to answer with a promise of 1 million electric cars. The minister lately frankly admitted, that promise was given without investigating its feasibility or cost. The frankness is unique – but that ”climate initiatives” are often not weighted on a Euro per ton saved is not. And that has to stop.

This huge spending by the government on my car, is crazy. It makes the green transition much more expensive than it ought to be. That makes me frustrated. And I am equally upset by the fact, that this subsidy (as many others) are easier to get if you have the capital and awareness to buy the expensive thing up on front. (subsidies for installing solar panels and new windows are the same). If you have less money it is harder to get, but you still pay the taxes to subsidise this madness.

It creates waste and inequality. But, it has to be said, driving the car, accelerating so quickly, is great fun!

Carbon madness and electric cars
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One thought on “Carbon madness and electric cars

  1. I erred in proof-reading. “Benzene” should be “gasoline” – the standard fuel. (benzene is not used as fuel, and has 1H for each C)

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