Car fleet policy evaluation: The case of bonus-malus schemes in Sweden

Journal article, 2019

In this paper, we evaluate the bonus-malus schemes proposed by governmental investigation in Sweden in 2014. The objective was to reach the target of maximum 95 g/km of average emissions for new car sales by 2020. Two bonus-malus schemes along with several other policies were introduced in different scenarios as measures to reach the target. The scenarios differ in design regarding bonus-malus schemes, vehicle circulation tax, clean car premiums, company car benefits tax, and fuel tax. Both private and company car segments are targeted in these scenarios. We use a nested logit model for car type choice to predict the effects of the proposed policy scenarios on Swedish new car sales. Moreover, we introduce a methodology to predict the future of car supply. Our model results show that none of the three proposed policy scenarios is successful enough to meet the average emissions target. Furthermore, although the number of electric, plug-in hybrid, and alternative fuel cars will increase, new car sales will still be dominated by fossil-fueled cars in all scenarios. The average emissions in the scenarios containing bonus-malus schemes are not lower than that of the business-as-usual scenario. However, introducing bonus-malus schemes on its own would reduce emissions showing that interacting with other non--differentiated policies counteracts their effects. Moreover, bonus-malus schemes are predicted to give a budget surplus effect.