ZEW - Centre for European Economic Research

09/04/2023 | Press release | Distributed by Public on 09/04/2023 02:11

Subsidies for Plug-In Hybrids Found to Be Environmentally Damaging // Subsidies for Plug-In Hybrids Result in Increased Purchase of Large and Heavy Vehicles

Subsidies for Plug-In Hybrids Result in Increased Purchase of Large and Heavy Vehicles

Plug-in hybrids have been marketed as environmentally friendly, although in reality energy consumption is comparatively high due to consumer behaviour.

The discontinuation of subsidies for plug-in hybrids in Germany on 1 January 2023 has proven to be a wise climate policy decision. A recent study by ZEW Mannheim shows that ending these subsidies will save more than 167,000 tonnes of carbon emissions annually, which equals the yearly emissions of over 53,000 households. The subsidies for plug-in hybrids were predominantly used for the purchase of relatively large and heavy vehicles, which, as evidenced by the gathered data, are rarely recharged and rarely put into electric mode. Consequently, their contribution to emission reduction remains rather insignificant.

"The subsidies were predominantly used for the acquisition of large and heavy new cars. Domestic automobile manufacturers reaped notable benefits from this strategy, as it allowed them to substantially increase the weight of their vehicle fleets, thus easing compliance with EU emission standards. This is because these standards are weight-dependent: the heavier the vehicle, the greater their permissible emissions," explains Ilona Tsanko, a researcher in ZEW's "Economics of Innovation and Industrial Dynamics" Unit and a member of ZEW's "Competition and Innovation" Junior Research Group. "The introduction of low-emission innovations, in this case, plug-in hybrids, does not inherently guarantee an actual reduction in emissions. It is necessary that consumers are informed, prior to purchase, about how to use these products in an energy-efficient way and what costs arise if they don't do so," Tsanko stresses.