Headline: "EU Pours Billions into Fossil Fuel Vehicles, New Study Unveils"
The five largest economies in the European Union allocate an annual subsidy of approximately 42 billion euros ($45.60 billion) to fossil fuel-powered company vehicles. This finding is part of a study conducted by Environmental Resources Management (ERM) for the environmental group Transport & Environment (T&E). Released on Monday, the report highlights the substantial support these vehicles receive despite the growing need for more environmentally friendly transportation alternatives.
Italy leads the subsidies at 16 billion euros, followed closely by Germany at 13.7 billion euros. France and Poland also contribute 6.4 billion euros and 6.1 billion euros, respectively. Often provided as an employment benefit, these company vehicles account for around 60% of new car sales in Europe. The subsidies cover a range of benefits, including tax reductions and fuel cost allowances.
The study also revealed that 15 billion euros of the total subsidies are directed towards sports utility vehicles (SUVs). On average, company car users benefit from an annual tax advantage of 6,800 euros, which can rise to 21,600 euros for the most polluting large models.
T&E's fleet director criticized the current subsidy model, stating, "It is entirely irrational and unacceptable that we are still funneling billions of taxpayer money into technology that is completely contrary to the European Commission’s green transition agenda."
The report's publication coincides with a decline in electric vehicle (EV) sales across Europe. This downturn is attributed to the higher cost of electric vehicles compared to their fossil fuel counterparts, making them less accessible to many consumers. In August, fully electric vehicle sales in the EU fell by 43.9%. Germany and France, two of the largest EV markets, experienced declines of 68.8% and 33.1%, respectively.
The study also notes that financial incentives for drivers to switch to EVs are currently only offered in the former EU member, the United Kingdom.
These findings come at a time when the EU is grappling with how to transition to more sustainable transport. European Commission President Ursula von der Leyen, in a letter dated September 17 to the EU’s new climate chief Wopke Hoekstra, emphasized the need to propose methods for phasing out fossil fuel subsidies, identifying it as a priority of the Union's climate agenda.