Ireland’s target of having 1,000,000 electric vehicles on the road by 2030 can be achieved only by use of “regressive” incentives and at a substantial cost to the exchequer, an Oireachtas report has found.
The independent Parliamentary Budget Office (PBO), in a comprehensive overview of Ireland’s electric vehicle (EV) incentives, finds the Government’s target of having 936,000 EVs on the road within the next eight years will only be realised with some form of Government incentive.
Pointing to international research, it concludes these incentives tend to benefit the more affluent. “A recent study on Ireland’s electric vehicle incentives suggests that current grants for electric vehicles in Ireland privilege high-income people,” it finds.
However, such incentives will be unavoidable to meet a 2025 target of 200,000 EVs and 2030 target of 1,000,000 million EVs, it adds. At the end of 2021, only 47,271 EVs were on Irish roads accounting for 1.65 per cent of the total fleet. Almost half of that total were hybrid vehicles and not fully electric.
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While accepting incentives are regressive it argues this must be weighed against the “devastating impact caused by climate change and the continued risk to humanity and nation states. Severe climate change has the potential to cause widespread societal disruption, drought, famine, and mass migration.”
The PBO also raises concerns about the implications for the State coffers, indicating the switch from internal combustion engines to electric engines could cost the exchequer up to 8 per cent of total revenues.
“If the 2030 electric vehicle targets are met and the longer-term objective of complete decarbonisation of the transport sector is achieved, there will be a significant exchequer impact. A previous analysis by the PBO estimated that circa 8 per cent of exchequer revenues could be at risk,” it states.
“The PBO would also like to highlight that if the anticipated reduction in market prices for EVs due to economies of scale and increased mass production take longer to materialise due to unforeseen geopolitical events affecting supply chains, and the availability of components such as semiconductors and batteries, the cost of continued Government EV incentives may be significant.”
In a comparison with other European countries, the PBO says incentives on offer in Ireland are broadly similar to other countries in terms of scale, though they differed in detail.
It estimates at least €322 million of exchequer support has been provided between 2010 to 2021 in EV incentives. Over half of that sum has been paid in VRT relief for hybrid cars. In future, only fully electric cars will receive State support. The PBO has estimated that State supports work out at an average of €11,300 per vehicle.
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The report points out that with only four-fifths of 1 per cent of the national fleet fully electric, the policy is a long way off from reaching its targets. It highlights other shortcomings in terms of reaching targets. It cites the Elective Vehicle Public Charge Point Scheme introduced in 2019. It aimed to have local authorities install 1,000 on-street public charge points within five years. However, three years into the scheme a total of only 33 charging points have been installed, or are in train — a total of 3 per cent of the target.
Norway has the largest number of EVs on the road with about 500,000 vehicles. That was achieved by putting punitive taxes on fossil fuel cars and giving generous incentives for EVs, to narrow the price gap. Scotland has introduced free loans for new and second-hand EVs.
Ireland is one of only two countries (along with Iceland) of 14 surveyed which does not have “low emission zones” in urban areas. They have been recently introduced in four cities in Scotland - with fines of £60 (€70) for those who bring high-emission cars into those zones.
