Impact of an emissions-based car tax policy on CO₂ emissions and tax revenue from private cars in Ireland

This article assesses private car CO₂ emissions and car tax revenue in Ireland over the 10-year period following the introduction of an emissions-based car taxation policy in 2008. We build on a model of the Irish car stock, which has new car sales, car fleet mileage, and CO₂ emissions intensity data to develop a bottom-up picture of historic CO₂ emissions from the car fleet. In this article, we develop a counterfactual scenario following car purchasing trends in EU countries that did not introduce an emissions-based purchase and annual car taxes over the same period. Relative to this counterfactual scenario, the CO₂ emissions intensity of the new car sales would have been 9% higher in 2018. This results in an estimated cumulative saving of 1.2 Mt CO₂ from 2008 to 2018 brought about by the tax change. Total annual emissions from private cars were 4.4% higher in the counterfactual scenario. The tax change also led to a fall in annual motor tax revenues. Recorded receipts from annual motor tax were €0.77 billion in 2018. Our study shows that this would have been €1.1 billion in 2018 under the pre-2008 tax regime. The estimated cost of abatement in this case ranges from €1,500–€2,220 per tonne of CO₂ avoided over the period 2009 − 2018. The study uses the novel technique of applying a technology stock model to better understand the longer-term consequences of a government policy.