THE world’s policymakers agreed at the Paris climate-change talks last December to try to limit greenhouse-gas emissions so global temperatures rise by no more than 2°C from pre-industrial levels. To succeed, they need, among other things, to encourage people to buy cleaner cars and lorries. Around 23% of carbon-dioxide emissions come from transport, of which three-quarters stem from road vehicles, according to the International Energy Agency.

Governments have tried to get drivers to go for greener vehicles. Some have raised the cost of driving by taxing petrol and diesel. Others have taxed the ownership of dirty cars by raising their annual registration fees, or dangled rebates on purchases of greener ones.

Which is the most efficient approach? A new paper by Anna Alberini and Markus Bareit compares policy changes in Switzerland’s 26 cantons to changes in new car sales in each area between 2005 and 2011 as a natural experiment. The least efficient policy was the annual rebate for owning a green car. The authors found this was much less effective than raising the annual registration fees on dirty cars, which had the bonus of raising...Continue reading