China subsidises green cars
The Chinese Government has unveiled plans to subsidise the purchase of green cars
The Chinese Government has unveiled plans to subsidise the purchase of green cars. A pilot program is due to commence in five cities across China: Shanghai, Shenzhen, Hangzhou, Hefei and Changchun. This move intends to reduce carbon emissions and also help increase people's interest in electric and hybrid cars.
It has been estimated that, by 2012, the Chinese Government will spend $1.8 million on green car subsidies. Currently the nationwide component of the subsidy scheme will offer grants to those who buy cars which consume 20 per cent less fuel than the average vehicle and that have an engine smaller than 1.6 litres. The aim is for car buyers to choose the more economical option when purchasing a car due to the monetary help they will receive.
In the five selected cities the subsidies will also cover plug-in hybrid and electric cars and will pay out up to CNY60 000 towards a purchase. Harry Zhao, an analyst with industry consultancy CSM Worldwide thinks "The handouts could get people interested in green car models now that the government has come up with a concrete plan and real money to back it up." The new green car subsidy programme endeavours to encourage customers away from fossil fuel powered vehicles.
The government will allocate the subsidies to car manufacturers in order for them to lower the prices of their products. Until now the high price of green cars has discouraged buyers, it is hoped that lowering their prices will help boost sales and increase the number of low-carbon vehicles on the market. In addition to this the five cities will also receive financing to help build an electric charging infrastructure within the cities, as the inconvenience of recharging is another reason sales have remained low.
It is unclear whether these subsidies will extend to car manufacturers outside of China and as Klaus Paur of TNS states "Imported cars are expensive in China. If you want to really penetrate the market and sell successfully, you need to produce locally." In which case subsidising already more expensive cars would be pointless. "The Chinese car manufacturers are the main target for the subsidies and they should be the main beneficiaries," asserts Paur.
It is not expected that these subsidies will work in the short term as there is currently an inadequate charging network and high battery costs. However it will hopefully make it easier for people with an interest in green cars to purchase them and also slowly widen their appeal. The National Development and Reform Commission stated on its website that it hoped the program would cover over 4 million cars by 2012. Hopefully these subsidies will reduce the emissions in China's transport system and encourage the purchase of cars powered using alternative energy resources.
Author: Rachael Bristow | Climate Action
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