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In 2010 the number of registered cars in the world hit the 1 billion (10⁹) mark (see Ward’s Auto, or, if you want to try some Dutch, Autoweek). This equated to 1 car for every 6,75 people, whereas in the United States (with the largest number of cars at 239.8 million, way ahead of China, which is at number two with 78 million registered vehicles) there was roughly 1 car for every 1.3 people. While other wealthy Western nations do not have quite as high a rate of car ownership as the US (for example, in the Netherlands there is roughly one car for every two people), these figures indicate a possibility for far more growth yet to come.

This represents a major concern in climate change mitigation. French public sector research centre IFP Energies Nouvelle reports that at 7Gt (that’s 7 billion metric tons), the transportation sector is, after energy production, the second largest contributor to global CO₂ emissions, responsible for roughly a quarter (estimates vary) of the total anthropogenic emissions of this most significant greenhouse gas (when abundance and warming potential are both considered). The vast majority of these emissions (roughly 85% in 2005) are due to road transport, much of which (about 60% in the European Union) is due to personal cars.

If we consider our own activities, the numbers can soon become staggering: According to official figures (which significantly underestimate emissions, as I discuss here), the popular Volkswagen Polo Vivo 1.4 emits about 147 grams of CO₂ per kilometre (to be indicated henceforth as g/km). For ease of calculation I will assume emissions of 150g/km. If one drives only 25km a day, amounting to more than 9 000 km annually, one’s total yearly CO₂ emissions from personal transport reaches roughly 1 350kg, or about 17 times my body mass and more than the mass of the vehicle itself!

As a result, many nations, especially Western European countries, have implemented so-called carbon taxes on new cars based on the official figures of CO₂ emissions. For company car drivers (who lease their cars from their employers), these have generally been implemented by placing cars into tax brackets (say 14, 20 or 25% of the new price), according to their emission levels. Road tax and registration tax exemptions for private cars are also granted to cars emitting quantities below a set threshold in certain countries, such as The Netherlands, whereas incremental increases in registration tax rates according to emission brackets are also applied in many European countries. For example, in one system one might pay €50 for every g/km of CO₂ emitted between 100 and 120g/km, €60 for every g/km between 120 and 150g/km, etc.; another system might charge 20% of the vehicle new price ± some quantity that depends on CO₂ emissions. Furthermore, an EU directive requires new cars to be given “energy labels” (ranging from A to G), based on emission or consumption figures. Different thresholds are also applied to petrol- and diesel-powered vehicles in these countries, as diesel combustion produces higher quantities of other pollutants (such as noxious oxides) per gram of CO₂ produced.

Another mechanism that has been considered is kilometre charges – a system which requires drivers to pay a certain rate per kilometre travelled, which is scaled by their cars’ emission level. For example, if the charge was 1c/g of CO₂, a driver of a Polo Vivo 1.4 covering 100km would pay 1c × 147g/km × 100km = R147.

Since September 2010, South Africa has also levied a carbon tax on new cars, albeit with a slightly different structure: all cars emitting more than 120g/km are taxed R75 for every additional gram of CO₂ emitted per kilometre (for example, the Polo Vivo 1.4 would be taxed 27 × 75 = R2025 at delivery). Even though the quality of South African diesel is notoriously poor  (even the so-called low sulphur diesel contains 5 times the legislated maximum sulphur content for road cars in the European Union), differentiation between petrol- and diesel-powered cars is entirely absent from South African carbon tax legislation.

The principle is great though, right? Surely we should encourage any mechanism that attempts to reduce greenhouse gas emissions, not so? Well, I’m not entirely convinced. Granted, the idea is good, but I can think of at least three prickly issues surrounding it’s implementation that have not seen sufficient consideration. These are the subject of my other blog on the topic.

2 Responses to “Background on carbon taxation and the automotive industry”

  1. Myra

    I think that carbon taxation in the automotive industry provides more of an idealistic – rather than appropriate – solution to a complex problem. That said, reducing GHG emissions in the road transport sector is something that we desperately have to work towards, especially in the face of rapidly growing car use worldwide (that you have mentioned). I think that the 2009, 50 by 50 Global Fuel Economy Initiative
    ( raises some interesting points and possibly more attainable measures (e.g. improving the efficiency of the fuel itself or cost effective fuel technologies) that could perhaps complement our current carbon tax strategies.

  2. cbrodrick

    I’m amazed at how low the emission threshold is for new vehicles in South Africa. If the Polo Vivo 1.4 exceeds it by approximately 23% – and this is an exceedingly efficient vehicle by South African standards – imagine how much taxation the majority of new vehicles sold in this country will incur.