'Cash for commercial clunkers' proposal

Govt studying motor group's plan to get greener goods vehicles on road

By Christopher Tan, The Straits Times, 30 Jan 2013

THE Motor Traders Association (MTA) has mooted a proposal to give a cash grant to encourage owners of old commercial vehicles to switch to new, environment-friendlier ones.

The Government is studying the plan, which calls for a one-off incentive payment of at least $10,000 per replacement of a pre-Euro 4 vehicle with a model that meets Euro 4 or higher standards.

This is similar to the US$3 billion (S$3.7 billion) "cash for clunkers" scheme in the United States in 2009 to replace old fuel-guzzling cars and trucks and Hong Kong's HK$770 million scheme in 2007 to replace old, pollutive diesel commercial vehicles.

The MTA said more certificates of entitlement (COEs) will have to be released at the same time to prevent any tax grant from being negated by higher COE premiums.

The COE price for commercial vehicles has been rising in recent years and hit a record $63,035 last month. At the latest tender last week, it closed at $57,051.

A slew of disincentives were also proposed, including tighter enforcement of emission rules, stiffer penalties and surcharges for those who want to revalidate the COE of older vehicles.

MTA vice-president Glenn Tan said: "Currently, we have the Carbon Emissions-Based Vehicle Scheme (CEVS) to encourage environment-friendly cars but we don't have anything similar for commercial vehicles. And diesel commercial vehicles are the ones that are more pollutive."

In a 10-page White Paper submitted to the Ministry of the Environment and Water Resources (MEWR) in November, the MTA said that based on the current replacement rate of old commercial vehicles, MEWR's target to boost air quality substantially by 2020 is unlikely to be met.

This is because about 70 per cent of Singapore's 178,000 goods vehicles and buses do not even meet the Euro 4 emission standard implemented here in 2006.

Of that, about half do not even meet the Euro 2 standard.

According to Land Transport Authority data, 45 per cent of goods vehicles are over nine years old as at last month, more than twice the percentage in 2005.

The MTA said a plan to introduce the Euro 5 standard next year and cleaner diesel fuel by July this year would not help much.

A MEWR spokesman said it is studying the proposals. "Our objective of cleaner air would be achieved sooner if the renewal of older diesel vehicles could be speeded up rather than delayed. The lessons in the earlier experience will be taken into account."

In October 2006, the Government rolled out the Euro 4 emission standard for diesel vehicles - a date which Japanese manufacturers could not comply with on time.

That led to the Japanese brands - which accounted for the lion's share of sales - being absent from the market for about a year.

That in turn caused COE premiums for commercial vehicles to crash to $1 for three consecutive months in 2007, prompting tens of thousands of fleet owners to extend the lifespan of their vehicles because it had become significantly cheaper to do so.

The result is that older vehicles continue to be in use till today.

Mr Tan of the MTA acknowledged that grants will have to come from government revenue but added that "there are larger benefits to be had" from getting old pollutive vehicles off the road.

Asian Clean Fuels Association executive director Clarence Woo agrees.

While switching to better quality fuels can bring immediate benefits, maximum gains will come only if the fuel is used in vehicles with the latest green technologies.

He added: "I am quite concerned about current COE prices... a lot of owners of older vehicles say they are now forced to hold back purchases, and may even have to keep their vehicles for another 10 years."

Below standard

- About 70 per cent of Singapore's 178,000 goods vehicles and buses do not meet the Euro 4 emission standard implemented here in 2006.

- Of that, about half do not even meet the Euro 2 standard.

- 45 per cent of goods vehicles are more than nine years old as at last month, more than twice the percentage in 2005, according to Land Transport Authority data.

HIGH COE COST NOT HELPING

I am quite concerned about current COE prices... a lot of owners of older vehicles say they are now forced to hold back purchases, and may even have to keep their vehicles for another 10 years.

- Asian Clean Fuels Association executive director Clarence Woo