Affordable alternatives to fossil fuel are required and accelerated by using taxation revenues for market incentives

Description:

It seems that the short-term focus is making fossil fuel more expensive instead of making alternatives widely available for realistic operational usage. A strong expectation is put on binding targets on vehicles OEMs and fuel providers to make the required alternatives available within the time frame. However, more focus on the creation of appropriate market conditions to allow rolling out solutions quickly is critical.

Investments in new sustainable transport technologies and systems should receive specific tax related incentives either to offset the risks associated with their long-term acceptance as standards or to support innovation and digitalization aimed at increasing efficiency (e.g. Industry roadmaps implementation).

To be effective, revenues of emission taxation should be used to redirect and motivate investments to transition assets to zero emission vehicles, shift to other transportation modes and increase operational efficiency.

Current aimed prices of around 20 Euro/tonne for Road ETS will not be sufficient to drive the required push for transition in the HDV, long distance, high payloads segment. It is critical to manage the effect of taxes on EU competitiveness.

Recommendations:

  • Develop realistic timeline for zero emissions competitive solutions and push demand for market penetration beyond setting CO2 emission standards for heavy-duty vehicles[1].
  • Support investment strategies at European and country level to allow carriers supported by their clients to buy low/zero GHG emissions trucks (Battery or Fuel Cell electric, bio or synthetic fuels) with a real chance to achieve impact by 2030.
  • Explore and implement “Carbon Contracts for Difference schemes for a wider and faster adoption of new, zero-emission technologies.
  • Define models to properly recycle tax revenues fitting the purpose. We strongly advise to dedicate the “income” generated in taxation (increased cost) to reduce the cost of the alternative vehicles and energies to accelerate adoption in line with the recent position paper published by ACEA, CLECAT and ESC[2]. For ALICE members, supporting companies’ actual emission reductions is the preferred option followed by investing in infrastructure.

[1] https://ec.europa.eu/clima/eu-action/transport-emissions/road-transport-reducing-co2-emissions-vehicles/reducing-co2-emissions-heavy-duty-vehicles_en

[2] ACEA, CLECAT, ESC (2022). Creation of a new EU Emission Trading Scheme for road transport