Sustainable Market Incentives -- Lessons from European Feebates for a ZEV Future

Abstract

Strong policies with sustainable incentives are needed to accelerate the EV transition. This paper assesses various feebate designs assessing recent policy evolution in five European countries. While there are key design elements that should be considered, there is no optimal feebate design. Different policy objectives could be served by feebates influencing its design and effectiveness. Using feebates to transition to EVs has emerged a key objective. With the financial sustainability of EV incentive programs being questioned, a self financing market mechanism could be the need of the hour solution. Irrespective of the policy goals, a feebate will impact both the supply side, i.e., the automotive industry and the consumer side. Globally, feebates can be used to effect technology leapfrogging while navigating the political economy of clean transportation policy in different country contexts. This paper highlights thirteen design elements of an effective feebate policy that can serve as a foundation for policymakers