March 20, 2007

Federal budget includes “green” vehicle initiatives

Ottawa, Ontario – The new federal budget was released yesterday and includes two “green” vehicle initiatives that will offer incentives on fuel-efficient vehicles and more money for vehicle scrapping programs.

The budget proposes a new Vehicle Efficiency Incentive, which will have three distinct components and take effect today, March 20. The incentive includes a performance-based rebate program offering up to $2,000 for the purchase of a new fuel-efficient vehicle; neutral treatment of a broad range of vehicles with average fuel efficiency; and a new Green Levy on fuel-inefficient vehicles.

The threshold will be based on a combined Transport Canada city and highway fuel efficiency rating; cars will be eligible for a rebate if their combined rate is 6.5 L/100 km or less, while minivans, SUVs and other light trucks must meet 8.3 L/100 km. The thresholds will be reviewed periodically. The basic rebate amount will be $1,000, with an additional $500 added for each half-litre per 100 km improvement in the combined fuel-efficiency rating, to a maximum rebate of $2,000. Efficient E-85 vehicles will be eligible for a rebate of $1,000.

A proposed “Green Levy” will apply to new passenger vehicles, excluding trucks, with fuel-efficiency ratings of 13.0 L/100 km or more, payable by the manufacturer or importer when the vehicles are delivered into the Canadian market. The levy will start at $1,000 for vehicles between 13.0 and 14.0 L/100 km, and will increase in $1,000 increments for each full litre per 100 km increase in the combined rating, to a maximum of $4,000 for vehicles with ratings of 16.0 L/100 km or more.

The budget will also provide $6 million over the next two years to existing not-for-profit vehicle scrap programs that offer incentives to Canadians to scrap their older, higher-polluting automobiles. The allocation represents a seven-fold increase in federal support for these programs. The government says that vehicles from before model-year 1995 accounted for 35 per cent of all vehicles on the road in 2005. The budget will also provide up to $30 million over the next two years for incentives designed by Environment Canada and Transport Canada, in consultation with stakeholders, to remove older vehicles from the roads.

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