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Study explores impact of changing gasoline and diesel taxes in Europe

27 December 2013

Diesel is currently taxed at a lower level than gasoline in Europe; however, since 2011 the EC has been considering reversing that situation by making energy taxes systematically reflect the CO2 performance of the energy product. As on a volumetric basis, diesel contains more carbon than gasoline, the tax on diesel fuel would increase. In a paper published in the journal Transportation Research Record: Journal of the Transportation Research Board, a team of researchers in France explore the economic and environmental outcomes of such a change.

…from an environmental viewpoint, because 1 L of diesel fuel contains more carbon than 1 L of gasoline and because diesel-powered cars emit more pollutants such as nitrogen oxides (NOx) and particulates [but less carbon monoxide (CO) and non-methane volatile organic compounds (NMVOCs)], diesel fuel should be more taxed than gasoline. Recent work from the French transport accounts commission confirmed previous results of the French Ministry for Sustainable Development: gasoline is overtaxed, and diesel fuel is undertaxed. However, because diesel-powered cars are more fuel-efficient, some authors argue that dieselization of the passenger car fleet should be increased to decrease CO2 emissions.

From a user’s viewpoint, diesel-powered cars have appealing characteristics: they are more fuel-efficient [about 26%], and their fuel is cheaper (at least in France and many other European countries). However, they also are more expensive, mainly because automakers capture a part of the expected gains. Because diesel- and gasoline- powered cars are almost perfect substitutes for users, a change in the levels of fuel taxation is expected to affect engine type choice by households and businesses, and automakers will respond by changing their pricing strategies to maintain their profits.

—Bretau and Weber

In their paper, the authors attempt to provide insight into the issue by using French data to model the demand and the supply sides of the car market. They found that, at the car fleet level for France:

  • A 60% increase in the diesel fuel tax would bring about a decrease in the dieselization rate at the fleet level from 64% to 45% between 2011 and 2030 and a decrease in overallCO2 emissions of passenger cars by 3.5%.

  • A scheme including a decreased gasoline tax could bring about an increase in CO2 emissions.

Resources

  • Vincent Breteau and Simon Weber (2013) “Reconsidering the Choice Between Gasoline- and Diesel-Powered Cars,” Transportation Research Record: Journal of the Transportation Research Board doi: 10.3141/2375-03

December 27, 2013 in Brief | Permalink | Comments (10) | TrackBack (0)

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Comments

In view of the latest data on the health effects of diesel, there is no way it should have a price advantage over petrol, which is bad enough itself.

You pick your poison and tax accordingly.

If all you worry about is CO2, tax gasoline, if you worry about people's health, tax diesel (or a mixture of the two).

What you need is a unified pollution model which allows you to select a pollution profile you want to discourage, and then a total amount, and it can set the relative levels of tax for each fuel type (and CNG, Ethanol, butanol, Electricity, etc.)

To change the rules of the game after many decades will create major objections from manufacturers and end users.

A new set of rules should be applied progressively over one+ vehicle generation (11.5+ years in USA) and even longer in EU.

A model based on various types of pollution and emissions from each fuel (as mahonj suggested) should not be too difficult to develop. Agreement is another problem to be solved and could take years. By that time, electrified vehicles may lead the market and liquid fuel taxes may have to be replaced by a fee on distance travelled.

@Harvey:
The rules, given a couple of years notice, are not really going to bother the manufacturers too much, as they have both diesel and petrol engines available and so can change the mix of production pretty readily.
They are selling new cars, and don't really have too much at stake in whether rising prices hit resale values of, presumably the diesel models in Europe.

In fact arguably if it raises the costs of diesel fleets then they will be pushed to re-equip faster.

Re-reading the above I over-simplified too much, as some companies are invested heavily in developing diesel technology, VW amongst them.
Given enough notice though the resistances should not be insuperable, as there are also a heck of a lot of companies wanting comparatively more favourable tax treatment of their petrol mills.

Given the recent developments with diesel/NG dual-fuel injectors, perhaps there's room for both conventional pollutant and carbon emissions to be reduced with diesels.  (Methanol in lieu of NG could do much the same; use diesel for pilot ignition, and MeOH for the main fuel supply.)

@EP:
The lipstick on that diesel pig gets ever thicker!
They now use about the same amount of precious metals to trap the gunk as Toyota use in their latest fuel cells, which has perfectly clean emissions.

My pet peeve is that the sticking plasters they use to trap most of the contaminants are just about OK as long as maintained.

We have all been behind diesel cars which have inadequate maintenance, and 'enjoyed' the foul black clouds which result.

Kill diesel technology with fire, says I.

@Davemart

Are you aware that a rigorous 2009 full life-cycle study by the National Academy of Sciences ("Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use.") concluded that "clean diesel" technology had among the lowest health and environmental damages of all of the vehicle technologies and fuel pathways examined in the study, which included EV, FCV, HEV, and CNG (approximately tied with CNG)?

It was reported here on GCC...

http://www.greencarcongress.com/2009/10/nas-external-20091022.html

What about biofuels?

To replace gasoline with ethanol/methanol requires some mods to the engine but biodiesel can be dropped into a diesel engine without any conversion costs - have I got that right?

There are second-generation biodiesel fuels ("renewable diesel") which are diesel-range hydrocarbons and are direct drop-in replacements for petroleum diesel fuel.

First-generation biodiesel (FAME) is generally limited to 20% biodiesel (B20) in most applications.

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