LegCo Diary: Early replacement of diesel commercial vehicles
On Wednesday, 10 March, CAN made a deputation stating its position on the Government’s proposed $540 million subsidy to encourage replacement of Euro II vehicles. Note that this scheme will follow on the heels of a subsidy for Euro I and pre-Euro vehicle owners, still in effect, which will expire on 31 March. The current subsidy, because of its low up-take, has been widely regarded by virtually all stakeholders to be a failure because only 26% of eligible vehicles applied for it.
The primary complaint, echoed again on Wednesday, has been that the amounts of the subsidy, respectively 12% and 18% for Euro I and II, are too small to function as a genuine financial inducement. Unfortunately, the current proposal is equally unenticing and offers an 18% subsidy only. It is rather obvious that, based on present experience, such a scheme’s carrot is simply too skimpy to alter behavior.
Thus, it is CAN’s position that the carrot needs to be fattened up considerably if we are to achieve EARLY replacement of dirty polluting vehicles. To match this rather paltry carrot, the Govt is proposing to increase license renewal fees slightly. Although the EPD was careful not to mention any dollar figure in the LegCo chamber, they had told us previously that any augmentation will be de minimis — something like an additional $500 per year per vehicle. Thus, the lame carrot will matched by an equally lame stick! Can there be any hope for ACCELERATED replacement of the oldest polluting vehicles with such a toothless set of measures?
In this regard, we certainly agree with the the transport industry: larger per vehicle subsidies would be much more effective. As opposed to other environmentalists, we have no issue with increasing payouts to polluters if it means getting their dirty vehicles off of our streets as soon as possible. Moreover, everyone can agree that it is a terrible use of taxpayer money to grant payments to truck owners to replace vehicles that were already going to be replaced because the vehicles had reached the natural end of their lifetime. No one, truck owner or public, could disagree with this characterization of the current subsidy scheme, which is an outrage in terms of its ineffectiveness.
So, at the very least, we hope the Government is not going to rewrite the errors of its present pre-Euro and Euro I scheme into its new Euro II subsidy plan.
If the per-vehicle subsidy was increased from 18% to 25-35%, for example, it would be fair for the Government to impose a tougher stick in the form of increased license fees. This point was aptly made by the transport industry itself during the LegCo session. At least, then, truckowners would be presented with a genuine choice: take advantage of the Government’s (generous) subsidy to buy a new truck or face substantially higher, penalizing licensing fees. In short, the juicier carrot would be accompanied by a stick of commensurate weight, addressing concerns of inequity from the transport industry itself.
During the session, there was also major discussion of a scrapping incentive. After all, argued the truck owners, getting the worst trucks off the streets is an important public health goal. We do agree. However, how do you address the problem of trucks that are about to fall apart anyway? Outside LegCo, the EPD told us that they were considering a compulsory scrapping scheme, which would, at least in theory, prevent cheating the system. Although we weren’t able to get into a detailed discussion with the EPD, presumably, such a scheme would necessitate the scrapping of a vehicle when it reached an age of, say, 20 years, with a cash payment for scrapping available for vehicles less than that age. The scrapping incentive would be biggest for the newest vehicles and dwindle in direct proportion to the age of the vehicle in order to fairly compensate vehicle owners for the unused lifetime of their trucks. THIS certainly seems like a fair scheme but, as usual, the devil is in the details. Obviously, the correct or incorrect calibration of the cash payment amount could significantly skew the scheme towards success or failure. The example of the present subsidy is instructive.
Annelise O’Connell of Mini Spotters may have proposed the best idea of all: mandatory dynamometer testing and elimination of the oldest vehicles. The method for “removal” could be either scrapping and/or subsidy. But the main point was the identification of the dirtiest vehicles to both optimize use of taxpayer money and reduce roadside emissions. Unfortunately, it appears that the EPD considers such a scheme impractical.
Wednesday’s discussion dealt primarily with the proposed Euro II subsidy, which is already fraught with major defects. But let’s not forget that the even thornier, more urgent problem of getting the oldest vehicles (pre-Euro and Euro I) off the road will remain, even if Euro II vehicles are subsidized more effectively than currently proposed.
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- Fast Facts about HK’s commercial diesel fleet (buses & trucks)
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