28 February 2013: The European Commission (EC) has published a Commission Staff Working Document on “Guidelines on Financial Incentives for Clean Energy and Energy Efficient Vehicles.” The document provides guidelines and proposes a common framework for using grants, loans, tax deductions, and other financial incentives to increase the number of clean and efficient vehicles in EU member States.

The guidelines apply to all motor vehicles, including cars, vans, buses, trucks, two- and three-wheelers, and quadricycles.They highlight two means by which financial incentives can support the market uptake of energy efficient vehicles: a pull-effect to enhance consumer demand, and a push-effect to stimulate manufacturer supply.

In order to minimize potential trade distortions from such incentives, the document provides a set of mandatory principles states must follow. It further provides a set of recommended principles to generate additional benefits at the European level. Mandatory principles entail non-discrimination of vehicle origin; compatibility with EU type-approval legislation; non-violation of EU state-aid rules, consideration of public procurement provisions; and notification of technical regulations during their draft stage. Recommended principles include technological neutrality; reference to common performance criteria; proportionality of incentives and technical performance; adequate incentive size; and reference to EU carbon dioxide limits.

The guidelines follow the 2010 EC communication on “A European Strategy on Clean and Energy Efficient Vehicles,” which called for a set of rules regarding financial incentivization as one of forty concrete measures to be implemented by the Commission. [EC Press Release] [Publication: Guidelines on Financial Incentives for Clean Energy and Energy Efficient Vehicles]