 |
Since 7.7.7 is just tomorrow.
Petrol prices increased by about 2 cents a litre among the major players in Singapore since the night of July 4 when Caltex paved the way for the cartel. The last big price hike, led by Shell then, was in April when pump prices were raised by about 10 cents a litre. Station discounts were also reduced to 5% in May. What does it spell for the car owner in the future if the cartel decides to have bigger year-end bonuses for its employees? The more petrol the car guzzles, the bigger the petrol bill. But there might be renewed interest in hybrid cars as a result of the constant petrol price hikes.
The Status So Far in Parliament
"On the second issue of hybrid technology, I understand the Minister will be commenting on this later. I hope the Minister will address what I consider to be the anomaly in our tax regime. While hybrid technology is obviously much more efficient, the cost of a hybrid car is almost 20-30% higher than the equivalent petrol car. And in Singapore terms, that translates to many thousands of dollars. As far as the consumer is concerned, it is really a no-brainer which one they will buy. In addition to that, hybrid cars are taxed according to their power or engine output, which means they pay quite a high road tax as well. So even with the green rebate which is in place, again, it is a no-brainer on the choice of cars."
Mr Hri Kumar (Bishan-Toa Payoh)
"A third example is hybrid and other green cars, as other Members have mentioned. While there have been increased rebates for hybrid cars, these cars still command a premium over normal cars of comparable size. Can the Government increase the rebate so that these greener cars are on par with others? Alternatively, can the Government consider a "carbon tax" to make gas guzzlers pay more for the cost they are imposing on our climate?"
Ms Eunice Olsen (NMP)
"Sir, in addition, my Ministry is encouraging the use of green vehicle technologies. I agree with Dr Lam and Mr Hri Kumar that hybrid cars are more fuel-efficient and less pollutive than conventional ones. We know that they cost slightly more. Indeed, such green vehicle technologies are becoming more widely accepted internationally. More models are being introduced, and our motor traders are doing their part by bringing them into Singapore. The decision to purchase a green vehicle is a lifestyle choice, but I am heartened to note that more car-owners are embracing these green vehicle technologies, despite the high prices. Since the enhancement of the Green Vehicle Rebate in January 2006, the number of green vehicles has gone up substantially from about 200 to 700. And I know at least two owners of such cars.
I am therefore glad to inform Dr Lam that the Government will continue to support green vehicles, and the Green Vehicle Rebate (GVR) will be extended for another two years to December 2009. With growing awareness, better technology driving down costs, and more models available in the market, I am hopeful that the take-up rate of green vehicles will continue to rise."
Environment and Water Resource Minister Assoc. Prof. Dr Yaacob Ibrahim
Why Green Vehicles are still Unpopular
Can the Green Vehicle Rebate entice Singapore motorists to switch to hybrid cars like the green version of the popular Honda Civic? At today's price, the Honda (1.3) hybrid is going from about $72,000, compared with the normal 1.6 Civic which is cheaper at about $66,000 upwards. With $72,000, one can decide to buy a 1.8 Honda stream or 1.8 Honda Civic. Thus, a smaller 1.3 hybrid car, despite the rebate, is going at the 1.8 car price range. It still more expensive to own a hybrid, all within the Honda basket of comparison. That is the bottom line.
Furthermore, the main problems with the uptake of hybrid cars are not only its high price but lack of awareness on how hybrid cars work and the uncertainty over its maintenance. There are only 700 green vehicles and of that figure, about 200 are for private use and the rest are taxis, a fact that Yaacob glossed over in his parliament reply. This dismal figure is testimony that the effort to push individual Singaporeans to choose green cars is half-hearted at best.
The government is simply more concerned about keeping a tight lid on the number of cars on the road, hybrid cars included. The COE is already in place to control the car population in Singapore. However, the COE in its current form does not influence people to drive green cars. So while controlling the car population is sensible from the road congestion point of view, the approach should be to regulate the population and yet push for more green cars on the road. Unfortunately, the measures to make current car owners think about switching to hybrid cars are confined to rhetoric and a relatively ineffective green rebate.
Using the Carrot and Stick: Green Subsidies and Taxes
The extension of the green rebate scheme till 2009 is the government's half glass full attempt to be green. The private car population size in 2005 stood at 401,000 and since there are only 200 private green cars on the road, it clearly means that the rebate, 40% of the Open Market Value, is not alluring enough. How much is enough then for a rebate? The qualitative answer is that "enough" is when we see more hybrid cars on the road and it becomes as common as the economical workhorse Altis or Sunny. Since the private hybrid car population is less than 1% of the total car population, it is time to review the 40% and perhaps increase it to 60%. This subsidy to spur green car demand is not unprecedented - the Green Vehicle Rebate was re-pegged from 20% to the current 40% of the OMV in 2005. Back then, there were only 79 green cars, so the 20% points jump in the GVR likely did contribute to the current 200 green cars on the road now.
However, despite the changes in the rebate in 2005, there was no massive rush to buy hybrids from Borneo Motors or Kah Motors. Therefore, the carrot alone is not enough to change demand.
If the government is really serious about encouraging green vehicles, it would have implemented a carbon dioxide emission tax for cars. Since when did the government pass a chance to tax road users? Hence, the more grammes of CO2 per km, the more green tax the car owner pays, like what NMP Eunice Olsen suggested. This is already in force in the UK. A carbon tax would complement the current tax system of penalising cars with bigger CC i.e. petrol-guzzling monsters like the increasingly ubiquitous SUVs which are ahead in the pack to deplete the world's non-renewable resources. Taxes discriminating the un-green cars are not necessarily bad as long as they are returned as attractive rebates for the green motorist
In London, green vehicles in the city are also exempt from paying the hard-hitting UK version of the ERP, the 8 pounds a day Congestion Charge which is much more expensive than our ERP. This is an inspiring scheme to import here in Singapore and it could be another good motivation tool to make people switch to green cars. If public education about being green is taking too long, then dollars and cents persuasions might be more convincing for the pragmatic Singaporean.
More than a Lifestyle Choice
Minister Yaacob quipped that driving a hybrid car in Singapore is a lifestyle choice. If the government is sincere about encouraging the use of green cars and transform the attitude that a hybrid car is no longer a lifestyle choice but the natural choice, there is so much more that can be done besides merely extending the GVR till 2009.
Comments (15)
TVD, good stuff. I am very weary of the deflection rhetoric of the government. I mean, after all, many consumption items can be said to be 'lifestyle' choices, but they are given the short-end of the government's carrot-and-stick approach (meaning more stick than carrot). Dare I say, for examples: cigarettes and alcohol.
That said, can we compare cigarettes to non-green cars? On face value, it seems possible, since both are 'invisibly' pollutive, harmful and costly to health and society in the long run. Smoking was once the coolest thing to do, and a classy cigarette in one's mouth was a status symbol, just like driving a black Mazda (if not a Beemer) today and tailgating everyone to show it off, i.e. penis substitute (not trying to be vulgar, its a real term in psychoanalytic theory).
Now if the comparison is valid, it means two things. You are 100% right, the government should do something about this, use more stick, it ain't just a lifestyle choice. But secondly, it is politically costly to the government to move too fast on this issue. Thus, the government took a long, long time to reach the big-stick situation today with regards to smoking. No smoker, ten years ago, would have imagined it possible that a pack would cost 3 times more and that he would receive stares when he lights up in public, and can only do so within an invisible cage marked by yellow paint. Yet, smokers have always been in a minority and non-smokers fully supported the government's anti-smoking efforts and even complaint about not enough being done. Now, when we come to car owners, not only are owners made up by the influential and vocal middle and upper classes, but non-owners covet car ownership too, i.e. they have penis envy (again, not trying to be vulgar, real term!).
So, the implication is that hybrid, green cars are simply not cool enough, do not have enough status in the Singaporean world of penis substitute/envy to be worth the political cost of using big stick against non-green cars. One thing we can learn from the government's anti-smoking campaign: make smoking socially uncool, morally hideous and signaling low status, then the voice of non-smokers will become powerful and it becomes politically profitable to do the big-stick thing.
BTW, I am weary of giving an already very powerful and control-freaky government more power, so I prefer to think of a market approach to solving this issue, for example, and dare I say it, charging a personal carbon tax and creating an individual carbon trading market.
Posted by dansong | July 6, 2007 9:30 PM
Thanks. A well written and well thought out article (if only we could read such incisive writing in the mainstream press).
The Singapore Government has within it's grasp the means to drive it's population towards an efficient. ethical and sustainable transport system. Maybe it's time for them to use their hegemony towards the right ends.
Posted by Singeo | July 7, 2007 12:27 AM
Personally, I believe OMV and PARF should just be waived for all hybrid and electric cars (if any exist in SG). That would be the ultimate incentive.
Sometimes, it has to be up to the government to forcefully implement unpopular movements, and the environmental issues are just one such movement.
Posted by ah.heng | July 7, 2007 4:01 AM
I thought I would just provide a little more info on how hybrids can be more efficient. Might be helpful in generating more demand.
Many drivers have chosen to install more batteries, as well as convert their Prius into a plug-in hybrid, essentially charging the car off an electrical socket. Depending on your battery size, you can get over 80 miles in range on a single charge.
Considering the size of Singapore and the typical commute, you could charge your Prius everyday and wouldn't have to use a single drop of petrol.
Now just compare the price of petrol to the price of electricity.
Posted by ah.heng | July 7, 2007 6:23 AM
This is a genuine question: has anyone calculated the cost (including environmental) of burning petrol in the car vs. of generating the electricity needed to charge the batteries--so as to give the same mileage? Would be very interested to see the comparison.
Posted by Curious | July 7, 2007 10:38 AM
Thanks everybody for the insightful comments. It made me understand the issues better.
Hi Dan
The penis complex is very apt!
I think you hit the nail on the head about implementing individual carbon trading. Not only would it drive people to take up green cars, it would also filter people into using public transport, assuming that public transport is exempt from carbon rationing or at least heavily discounted. The unused carbon allowance or rations would then be sold in the market to those who insist on owning a Fortuner behemoth in urban Singapore. And personal carbon trading need not be restricted to cars. It could extend to household power too but I digress. I think the carbon trading is at the Bill stage in the UK - something about everyone given carbon rations and they are able to buy more or sell the excess it when necessary. I've not come across any personal carbon at the national level - everything seems at the promising conceptual stage. Best to see how others play it before we join in and learn from their mistakes.
The political cost would probably be immense looking at the mindset of Singaporeans. Despite the affluence, as a whole, we are still indifferent about environmental issues. But political cost has not bothered the government much anyway if they are adamant on a stand e.g. GST hike, Singapore Rebel film.
Hi Singeo
Like the anti-smoking movement, sometimes the government has to step in. I totally agree. The questions are how and when to step in. The government can do so much more, certainly not overnight because of the political costs and national priorities, we are reasonable citizens. But the measures so far are small and slow.
Hi Ah.heng
I didn't realise that the Prius can be charged from wall-sockets after conversion. That is great stuff to share! Or free/discounted URA season parking as another incentive for green cars.
Hi Curious
Good question! Assuming that we leave out solar/wind/tidal/nuclear electricity generation in the Singapore context and that the hybrid car's electricity source is a wall-socket. However, the Prius and Civic, the more common hybrids here, run on both petrol and its own electricity. The electricity is generated and stored during braking. Something about making use of the excess kinetic energy while slowing down. All things equal, as the hybrid can go further than a standard petrol car of the same size with the same amount of petrol because the hybrid uses both petrol and its own electricity, that means the hybrid car is clearly more green (efficient use of fossil fuel and lower carbon emissions).
Posted by The Void Deck | July 7, 2007 5:05 PM
Even if we were to continue burning fossil fuel for generation at power plants, it would still be more efficient to run an electric powered vehicle than a combustion powered engine.
Electric motors are 100% efficient at producing torque, and after taking into account rates of conversion, you're getting roughly 70% efficiency. Meaning 70% of the energy is used to move your vehicle, the remainder goes off as heat and sound. Can't beat physics.
A combustion powered engine however is only 30% efficient at transmitting energy as most of it is dissipated as heat and sound.
And lastly, remember that it's much easier to convert a population of 10 power plants to use renewable fuel sources than it is 10,000 cars.
Posted by ah.heng | July 7, 2007 11:03 PM
Another thing about hybrid technology is that, it's nothing 'new'. It has been in used in trains for quite some time, how long I'm not exactly sure. As most trains nowadays run on an electric motor, when slowing down, the motor will generate a reverse current back into the batteries that if not properly regulated will blow them up.
Older technology simply ran the excess current generated across a resistor, dissipating off the energy as heat.
Later some bright guy (in the 80s I believe, or slightly later) figured that the power generated could be fed back into the batteries with proper regulating and thus the hybrid motor is born.
Posted by ah.heng | July 7, 2007 11:15 PM
Promoting green car means less pump means less revenue for oil companies mean less tax revenue collections. Thats how I see it.
Posted by anonymous | July 8, 2007 12:50 AM
Let just finish every drop of oil on earth. That will force everything to change. No more war for the sake of oil. Oil is creating more grieve to everyone, everything on earth than good.
Posted by Ah Xian | July 14, 2007 7:11 AM
Ah Xian,
Sadly, oil reserves are there aplenty. High oil prices are due to increasing demand to competing economic booms in Asia, Europe and North America, the uneven spread of the oil reserves in the less developed economies (in S. America, Africa and Middle-East), the OPEC cartel and lagging refining capacity. So, because of these geoeconomic and geopolitical factors, in the search for every drop of oil on earth, there will be lots of war and misery to get through before we drank it all up. By then, modern civilization would probably have ended. Not a solution, but I can understand your frustration.
Posted by dansong | July 17, 2007 7:42 AM
Looks like we are stuck with fossil fuels and their tag along global socio-political problems. From Singapore's standpoint, we are left with few energy alternatives. Most probably solar. Or we could go nuclear.
Posted by The Void Deck | July 19, 2007 6:00 PM
I thoroughly agree that hybrid cars are not actively encouraged at this point in time.
However, i believe the more pertinent question is whether we SHOULD encourage hybrid cars in the first place.
Is the rationale for having a hybrid (1) saving fuel, for the consumer; (2) or saving the environment; (3) or reducing Singapore's dependance on fossil fuels? If it is (2) or (3), I can understand the need for govt intervention BUT if the primary reason is (1), then the onus is on hybrid makers to lower prices, such that the increased upfront cost of owning a hybrid is offset by the cheaper fuel expenditure - I see no reason why the govt should help them make more money or help consumers save their petrol bills for its own sake.
Even for (2) and (3), the govt has to weigh the lowered fuel consumption against the likelihood that, with incentives, hybrids would be so cheap that even more people buy cars - thus increasing the total amount of fuel/CO2 emitted again.
Thus, I do not think that on balance, the case for encouraging hybrids is that clear cut at all.
Posted by ruykava | July 26, 2007 11:05 AM
Hi ruykava
Let me quickly touch on your point that hybrids would become so attractive that people would buy cars and the net carbon contribution is more than the status quo. You are correct but the COE system controls the car population already to an extent so what the government could consider is to make people switch from fuel guzzlers to fuel-efficient vehicles, hybrids included. So the net carbon production would be less than the status quo?
I like your concise rationale for having a hybrid, and if I may rehash it - 1) the consumer benefits, 2) the environment benefits, 3) the state benefits. Hybrids should indeed be encouraged for these 3 valid reasons together. The case for a hybrid is clear on condition that the hybrid policy rolled out benefits the consumers, the environment and the state altogether not forgetting the businesses of course). I beg to differ. The pertinent question is not whether hybrid cars should be encouraged or not but how they should be encouraged given the theoretical benefits to all stakeholders.
Also, from a policy-political will angle, the government should follow through with its environmental rhetoric on green vehicles - actions speak louder than words. The implicit question to me is how far should it go to encourage pragmatic potential car-owners to choose, and the profit-minded car industry to offer, hybrid cars as a realistic choice. I presume we both agree that more can be done by the government to nudge both car-owners and the car industry in the hybrid direction. It is just that we might disagree on how and how much more.
Posted by The Void Deck | July 27, 2007 12:44 AM
Could the government's lack of action be due to Singapore's investments in the oil refining industry?
Posted by hmmm | September 14, 2008 11:20 PM