ECO-FRIENDLY VEHICLES (Incentives)

Mr Gerard Ee asked the Minister for Communications and Information Technology whether he will consider granting incentives such as a 50% rebate on road tax to encourage the importation and use of eco-friendly vehicles.

The Parliamentary Secretary to the Minister for Communications and Information (Assoc. Prof. Yaacob Ibrahim) (for the Minister for Communications and Information): Mr Speaker, Sir, eco-friendly or "green" vehicles generate substantially less pollution than conventional vehicles. The environmental benefits of using eco-friendly or "green" vehicles are:

(i) lower emission of carbon dioxide (CO2) which contributes to the "greenhouse" effect;

(ii) lower emission of carbon monoxide (CO), hydrocarbons and nitrogen and sulphur oxides, and particulates; and

(iii) lower noise levels.

My Ministry and the Land Transport Authority, together with the Ministry of the Environment and the Inter-Agency Committee on Energy Efficiency (IACEE), have reviewed measures to promote the importation and use of eco-friendly vehicles in Singapore.

As recently announced by my Minister of State, Dr John Chen, the Ministry has decided to introduce "green" vehicle rebates for electric and hybrid cars. These rebates are intended to lower the cost differential between "green" cars and conventional cars. To reduce the cost of ownership of "green" cars, a rebate equivalent to 20% of the car's Open Market Value will be given at the point of registration. In addition, hybrid and electric cars will be given a road tax rebate of 10% and 20% respectively.

Based on LTA's estimates, the effect of the rebate would be to lower the difference in purchase price between a conventional car and a hybrid car from 16% to 10% and to reduce the daily operating cost difference from 7.3% to 2.5%.

The "green" vehicle rebates for electric and hybrid cars will be implemented in early 2001. These rebates will be subsequently reviewed after three years.

The Land Transport Authority, together with the Ministry of the Environment, will be announcing further details of the "green" vehicle rebates scheme for electric and hybrid cars within the next few weeks. The announcement will also cover the categorisation of green vehicles for road tax and Certificate of Entitlement purposes.

Mr Simon Tay: Sir, I am not sure I understood the Parliamentary Secretary correctly. But if I got it right, it is still nominally more expensive to purchase and run either a hybrid car or an electric car. Is that correct?

Assoc. Prof. Yaacob Ibrahim: It is slightly higher than a conventional car.

Mr Simon Tay: In terms of land transport, a car is a car. It should be on par. In terms of efficiency and pollution, the hybrid car and electric car will be more beneficial for our environment. Should it not, if anything, be nominally cheaper?

Assoc. Prof. Yaacob Ibrahim: Sir, these are new technology cars. We have to look at how the cost for each car will evolve over time, because new models are produced as technology improves. At this point in time, it is also very difficult for us to ascertain between the different models at what point we should equate the rebate to make them equal to conventional cars. This is a support by the Government to encourage the use of eco-friendly vehicles. And in view of our car ownership and land transport policies, it is better, at this point in time, for conventional car and green car not to be any different significantly to potential buyers coming into the market. Should we lower the difference substantially in favour of "green" cars, we may attract non-car buyers into buying such a car just because it is much cheaper than conventional cars. And that might undermine our land transport policies in Singapore.

Mr Simon Tay: Sir, if I may pursue the point just a little further. On the pricing of leaded and unleaded type of gasoline when this was available in Singapore, we did the right way by making unleaded gasoline cheaper. Surely this should be the principle, Sir.

Assoc. Prof. Yaacob Ibrahim: Sir, I think we have to look at how the technology will evolve with time. At this point in time, the development cost of such cars is very high. As and when the technology becomes cheaper and there is a demand for such cars, then we will have to review it. But at this point in time, we feel that this is the right level.

Mr S. Iswaran (West Coast): Sir, may I ask the Parliamentary Secretary when the Ministry anticipates the technology might stabilise and when, as a minimum, we can expect at least parity in the cost of owning and operating eco-friendly vehicles versus conventional vehicles?

Assoc. Prof. Yaacob Ibrahim: Sir, at this point in time, we really do not have the answer because it depends on the people who are researching and manufacturing eco-friendly vehicles. At this point in time, our review was based on demands of the market. As and when there are other developments, we will review it.