Debate on ministries' budgets: Environment and Water Resources

Carrot-stick emissions approach extended to commercial vehicles

Business owners who buy an electric commercial vehicle from April next year will receive a cash grant of $30,000, in a move that is likely to nudge them away from diesel.

The Commercial Vehicle Emissions Scheme (CVES), which starts in April next year for new and imported used light goods vehicles and minibuses, is similar to one which has been extended to passenger car buyers since 2001.

But unlike the green vehicle schemes for cars, the CVES offers hard cash instead of tax offsets.

Electric commercial vehicles buyers will get $30,000 in three equal instalments per year starting at the point of the electric vehicle's (EV's) registration.

The type of EV is not restricted to battery-powered models. Fuel cell models (which make electricity chemically using either stored hydrogen or methane) will qualify for the scheme's Band A, too - as long as they produce no more than 150g/km of carbon dioxide.

Those who buy petrol-electric hybrids are likely to receive $10,000 in cash for Band B, as well as those who buy the cleanest combustion engine models (likely petrol-powered) - as long as the emissions fall below certain benchmarks.

And like the Vehicular Emissions Scheme (VES) for passenger cars, the CVES will levy a penalty for more pollutive vehicles, which fall into Band C, and will be slapped with a $10,000 surcharge.

Unlike the current VES, the CVES does not have a Neutral band where neither carrot nor stick applies.

Environment and Water Resources Minister Masagos Zulkifli told the House yesterday: "Commercial vehicles, especially light goods vehicles, are key emission sources and pollute our air due to their high mileage and reliance on diesel."

To coax more fleet owners to trade in their vehicles for cleaner models, the seven-year-old Early Turnover Scheme has been enhanced.

First, it will be extended to cover Euro 4 models from April next year. This will almost treble the number of eligible vehicles to more than 63,000 units - or more than 40 per cent of the commercial vehicle population.

Second, there will be more Certificate of Entitlement (COE) bonuses, ranging from 20 per cent to 100 per cent. This bonus is factored into a formula which takes into account elements such as the remaining years of the existing vehicle's COE.

For instance, operators will get a 45 per cent COE bonus for replacing their Euro 2 or 3 light goods vehicles (LGVs) with LGVs in Band A and B of the CVES, or with a heavy goods vehicle (HGV) compliant with the Euro 6 standard.

Owners replacing their Euro 4 HGVs with Euro 6 HGVs or LGVs in Band A or B will get a 40 per cent COE bonus. If they go electric, they get an 80 per cent COE bonus.

Vehicle owners will get both ETS and CVES benefits if they replace their LGVs with Euro 6 models which fall within the A and B bands.

Mr Masagos said the VES for passenger cars will be refined further.

Motor industry players said the new measures are likely to lead to the gradual exit of diesel models.

Diversified motor group Prime chairman Neo Nam Heng, who has been lobbying for VES to be extended to commercial vehicles, said: "This a turning point for the market. We are making a big leap to move from diesel to electric. The incentives are generous enough to make people consider electric or hybrid models. There are already many smaller models which are full electric available in Japan."

Mr Samuel Yong, director of marketing and business strategy at Toyota agent Borneo Motors, said the announcement provides clarity, "so we can start a meaningful and action-based conversation with Toyota" to start bringing cleaner models here.

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A version of this article appeared in the print edition of The Straits Times on March 05, 2020, with the headline Carrot-stick emissions approach extended to commercial vehicles. Subscribe