Impact on energy consumption from new tax legislation on passenger cars in 2007

This project assesses the impact on energy consumption and CO2 emission from a purchase tax on passenger cars partly based on the specific consumption of the cars. In April 2007 such a tax system was introduced in Denmark which includes remarkable tax reductions for small energy efficient passenger cars. The possible effects of the new legislation can be summarized in two very different scenarios: a) The buyers of new cars will choose smaller and more energy efficient cars thereby contributing to a reduction of the total energy consumption. b) Total sales of cars and the use of the cars increases and consequently the total energy consumption will increase. The aim of the project is to assess the behavioural effects and thereby the energy effects of the new legislation. The assessment includes decisions on car ownership as well as choice of car type and use of the car. The effects will be assessed trough interview with central participants in the market. Furthermore the project includes an analysis of sales of cars. Finally the effects will be assessed through a survey among buyers of new cars. This study will provide important information useful in an international perspective when making policy decisions on car taxation