Study: Hybrid car incentives not so eco-smart

Government incentives to encourage the purchase of hybrid vehicles might not be as eco-smart as advertised, according to a new study from the University of British Columbia (UBC).

The research finds that people are buying hybrids instead of small, relatively fuel-efficient conventional cars, rather than choosing them as an alternative to petrol-thirsty, carbon-polluting large trucks, vans and SUVs. As a result, government programmes aimed at encouraging the purchase of hybrids might not reap as many green benefits as intended.

“If the intention of rebate programs is to replace gas guzzlers with hybrids, they are failing,” said Ambarish Chandra, a professor at UBC’s Sauder School of Business and a co-author of the new study. In fact, he said, large vehicle sales have risen steadily since the introduction of hybrid rebates.

“People are choosing hybrids over similarly priced small- and medium-sized conventional cars, which are not far behind hybrids for fuel efficiency and emissions,” Chandra said. “The reductions in carbon emissions are therefore not great.”

The study also finds that the majority of consumers who purchase hybrids were not motivated to do so by government rebates, said Chandra, who conducted the research with Sumeet Gulati, assistant professor in UBC’s Deptartment of Food and Resource Economics, and Milind Kandlikar of UBC’s Liu Institute for Global Issues and Institute of Asian Research.

“Our estimates indicate that two-thirds of people who buy hybrids were going to buy them anyway,” Chandra said. “So for the majority, rebates are not changing behaviour — they are subsidizing planned purchases.”

According to the study, the inefficiency of rebate programs rises disproportionately when governments increase rebate levels.

“When B.C.’s rebate jumped from $1,000 to $2,000 in 2005, the actual cost of reducing carbon emissions more than doubled,” Chandra said, noting that Ontario recently increased its rebate to a maximum of $10,000 per hybrid vehicle.

Chandra said governments could garner greater environmental benefits by purchasing carbon offsets (currently priced between $3 and $40 per tonne on carbon markets) or investing in green jobs and technologies.