Despite Its Auto Industry's Woes, Sweden Plans Carbon Tax on Gas, Diesel Vehicles

Despite Its Auto Industry's Woes, Sweden Plans Carbon Tax on Gas, Diesel Vehicles

By John O'Dell March 11, 2009

Carrots and sticks usually come into play when governments want citizens and corporations to change their behavior.

Most governments these days are scrambling to hand out carrots (in the form of tax breaks) for motor vehicle manufacturers whose sales have plummeted during the global economic recession. But Sweden has fashioned a big stick -- a carbon emissions tax that would noticeably increase the cost of most vehicles that burn fossil fuels.

The Swedish Association of Green Motorists estimates the average annual cost to owners with vehicles subject to the tax at $180. Oh to have been in the corporate boardrooms of already struggling Saab and Volvo when word of this plan hit.

The Swedish plan calls for a graduated tax, with the highest-emissions vehicles being sold in that country hit hardest. The proposal is part of an ambitious plan to cut the country's greenhouse-gas emissions by 40 percent through 2020

There is one carrot in the plan, though: "Green" cars would be exempt from the tax for five years.

The tax break would apply to very clean fossil-fuel vehicles as well as those powered by renewable fuels and electricity. Sweden defines a green vehicle as one emitting less than 210 grams of CO2 per kilometer (0.62 mile) driven.

Because carbon-dioxide emissions are directly tied to the amount of fossil fuel burned, our calculations show that gas-burning cars would have to deliver at least 47.2 mpg and diesels at least 52.9 mpg to be rated sufficiently "clean" to avoid the tax.

"The global recession can't be used as an excuse to stop acting to solve our big future challenges," the government said in a statement. "The work for an international response to the climate questions must continue to be high up on our and the world's agendas."

Greg Johnson, Contributor

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.