Tax credits with ‘sunset provision’ urged for e-vehicles
For the Duterte administration which has aversion extending subsidies, a “tax credit policy with sunset provision” is seen as the likely pathway that could gain traction on the rollout of plug-in hybrids or electric vehicles (EVs) in the country.
The duration or implementation timeframe of that tax credits, according to Senate Committee on Energy Chairman Sherwin T. Gatchalian, shall be prudently established and fixed by the Department of Energy.
“Tax credits with sunset provision, that is workable, I think that’s what DOE has been looking at. The DOE should determine that sunset provision for tax credits, so it’s only within that timeframe when technology is still quite expensive that we give certain amounts of fiscal incentives,” he said.
The lawmaker added the tax credits’ life cycle must factor in as to when “the cost of the technology will eventually go down – that at some point, these technologies must be able to compete with conventional technologies.”
Gatchalian further opined “without giving some level of subsidies, the migration (to EVs and hybrids) will be slow. To be honest, it will really be very difficult for us to shift.”
Nevertheless, he reckoned that beyond tax credits or subsidies, there are other possible ‘investment succor’ to EV deployments on the non-fiscal incentives sphere, such as allocation of priority lanes or exemption to the color-coding scheme.
“We don’t have as much space to give system incentives especially in this administration, so we have to find non-fiscal incentives… like, how do we promote EVs in the whole chain of importation all the way to the installation of charging stations,” the lawmaker asserted.
And parallel to the dilemma of other countries, even the developed jurisdictions of the United States and China, Gatchalian contended that infrastructure development of charging stations appears to be on catchup mode still vis-à-vis targets of mass-scale deployment of plug-in hybrids and EVs.
Even General Motors Chairman and Chief Executive Officer Mary Barra noted in a conference this year that “EV producers face barriers on what is observed as slower-pace-than-expected rollout of charging stations,” which they deem have also been waning the momentum of many end-users to opt for EVs.
But according to the International Energy Agency (IEA), charging infrastructure has already been keeping pace, with the number of private chargers at home and workplaces already reaching 3.0 million worldwide in 2017.
The Paris-based global energy think tank highlighted that “the growth of EVs has largely been driven by government policy, including public procurement programs, financial incentives reducing the cost purchase of EVs, tightened fuel economy standards and regulations on the emission of local pollutants, as well as low and zero-emission vehicle mandates.”
These are in tandem with “a variety of local measures, such as restriction on the circulation of vehicles based on their pollutant emission performances.”
Additionally, the IEA emphasized that “the rapid uptake of EVs has been helped by progress made in recent years to improve the performance and reduce the costs of lithium-ion batteries,” noting further that “battery cost reductions and performance improvements are essential to improve the appeal of EVs.”