Monday, March 19, 2007

Federal green levies and rebates for cars

The US has had rebates for hybrid vehicles available for a while now, and we are finally catching up. In fact, yesterday's budget brings in both rebates for efficient cars, and a new "green levy" on the most inefficient of cars sold in Canada. (See Annex 5 for details. Search way down at the bottom for "green levy") This levy is comes into effect immediately on any new cars delivered or imported after March 19, 2007. (However vehicles already on dealer lots are exempted.)

So, how inefficient does a car need to be to get hit by the levy? And will it stop people from buying these cars? According to the Dept. of Finance:

Vehicles that have a weighted average fuel consumption of 13 or more litres per 100 kilometres will be subject to the levy at the following rates:

* at least 13 but less than 14 litres per 100 kilometres, $1,000;

* at least 14 but less than 15 litres per 100 kilometres, $2,000;

* at least 15 but less than 16 litres per 100 kilometres, $3,000; and

* 16 or more litres per 100 kilometres, $4,000.

Note that this is a weighted average fuel consumption:

"taking into account 55 per cent of city fuel consumption and 45 per cent of highway fuel consumption, as determined in accordance with information published by the Government of Canada under the EnerGuide mark, such as the 2007 Vehicle EnerGuide."

So, which vehicles will get hit with this levy? If you look at the National Resources Canada Vehicle Energuide site, you can get an idea. Of course, you'll have to do a bit of calculating to figure it out, as they haven't yet added the weighted average calculation to the tables. As an example, I looked at 2007 mid-size vehicles, and sorted by fuel consumption. It looks like anything from the Audi S6 (15.2 l/100 km city/10.4 l/100km hwy) on down will be "levied".

Now, given that the Audi S6 pricing starts at $100,000, how many buyers are likely to be deterred by a $1,000 (or even $4,000) levy?! In fact, this is probably the case for most of the cars likely to be hit with the levy (whose brand names include Mercedes-Benz, Cadillac, Rolls-Royce, Ferrari, etcetera).

[Actually, the CHRYSLER SEBRING FFV (15.5 l/100km city; 10.0 l/100km hwy) looks like it would fall under the levy as well, however the FFV stands for "flex-fuel vehicle", which means that it can run on 85% ethanol, and is therefore eligible for the rebate instead; see below. However, there aren't many places yet in Canada to buy E85 fuel. A lot of the time owners of this car would likely end up using gasoline; and the gasoline consumption ratings alone certainly wouldn't have qualified this car for a rebate.]

In addition to the levy, Flaherty will give you a rebate of up to $2000 if you purchase a more efficient car. (See Chapter 3 of the budget for details.)

The basic rebate amount will be $1,000, and an additional $500 will be added for each half litre per 100 km improvement in the combined fuel-efficiency rating of the vehicle below these thresholds. The maximum rebate value will be $2,000. Efficient E-85 fuel vehicles will be eligible for a rebate of $1,000. Eligible new vehicle purchases or leases as of March 20, 2007, will qualify for the rebate.

Eligible for the full rebate are the Toyota Prius (4.1 l/100km weighted average, MSRP starts at $31,280), Honda Civic Hybrid (4.5 l/100 km weighted average, MSRP starts at $26,250), and Ford Escape Hybrid (7.4 l/100 km weighted average, MSRP starts at $31,499).

These rebates are on top of any provincial rebates that you may have available. (Described in this post, and this post.)

Note the fine print:

While the introduction of rebates for eligible fuel-efficient vehicles is proposed to take effect March 20, 2007, the payment of rebates will be made once administration and delivery systems have been put in place. The Government is aiming to make rebate payments by fall 2007.

So, to sum up, while it's nice to reward people for buying Priuses, it's unlikely that the levy on highly inefficient luxury cars will have any effect on reducing pollution or GHG emissions.


Feynman and Coulter's Love Child said...

I'm still not sure where anybody put the stupid idea is Flaherty's head that "fuel consumption" had anything more than a vague connection with "efficiency" (or, for that matter, what either case has in common with "reduced emissions").

If you really want to reduce emissions, every hippie in a 1973 VW bug or 1993 Toyota Tercel should be forced to replace his vehicle with a far more pollution-friendly 2006 H3.

LNeumann said...

Well, it depends on what kind of emissions you're talking about. If you just mean NOx, etc., you may be right. However, surely the more efficient a vehicle is, the less CO2 is produced per km - which I think is the point of this particular carrot and stick.

But in the end, the only way to really reduce emissions is to stop driving so much. (See here.)