Government will implement a scrapping scheme in 2018 and establish purchase incentives for battery electric vehicles

The Finnish Government will expedite the renewal of the car population by means of a scrapping premium. The campaign will cut down the emissions and improve the traffic safety of the car population. The campaign proposed by the Government is an excellent indication of the fact that even small measures can reduce emissions significantly. A scrapping campaign carried out every few years would reduce the carbon dioxide emissions from cars by approx. 100,000 tonnes at the 2030 level.

The Finnish Government has reserved an appropriation of a total of 8 million euros for the scrapping premium campaign to be carried out in January and February 2018. In the scrapping campaign, the buyer of a new passenger car will receive a scrapping premium of 1,500 euros, if the buyer delivers an old car owned by the buyer for scrapping at the same time. The carbon dioxide emissions of the new car must not exceed 110 g/km. There is no emission limit for plug-in hybrid cars, battery electric vehicles or cars driven either in whole or partly by high-concentration ethanol or methane. Their scrapping premium is 2,500 euros. The premium consists of a portion of 1,000 or 2,000 euros paid by the Government and a portion of 500 euros paid by the Finnish automotive sector. The most energy-efficient third of car models available on the market go below the emission limit proposed for the scrapping premium.

The Finnish Government has set an earlier objective to reach a level of 250,000 electric cars in Finland by 2030. The purchase of all-electric cars will be subsidised by 2,000 euros per car from the beginning of 2018. The subsidy directed at households amounts to just under 6 million euros per year over the next four years.

The scrapping premium will cut down the emissions and improve the traffic safety of the car population

There was a successful scrapping premium experiment in Finland in 2015. In that experiment, the emission limit of a new car was 120 g/km, and the amount of the scrapping premium was 1,500 euros. The number of end-of-life vehicles recycled within the campaign was clearly above the normal level.

In the experiment, about 60 per cent of those who bought a new car would not have purchased a new low-emission car and recycled their old car had there not been a scrapping campaign. The theoretical carbon dioxide emissions of the scrapped end-of-life cars were on average 70 per cent higher than those of the new cars purchased to replace the old cars.

Those who bought a new car as a result of the scrapping premium experiment in 2015 differed from an average purchaser of a new car in that they were on average younger persons and with a smaller income than the buyers of new cars on average. An average car bought using the scrapping premium cost approx. 21,000 euros while the average price of a new car in Finland is normally approx. 32,000 euros.

Even though the scrapping premium requires Government funding, it also increases the state tax revenues in the form of car tax revenues and value-added tax revenues. By comparison, the 2015 experiment, where the appropriation was equal to that in the act proposed now, increased the car tax revenues by an extra 17 million euros.