(Reuters) – The five largest EU members spend 42 billion euros ($45.60 billion) annually subsidizing fossil-fuel company cars, according to a study by Transport & Environment (T&E). The study urged a shift toward more subsidies for electric vehicles (EVs) instead, highlighting the impact of EU fossil subsidies. #EUFossilSubsidies
Company cars account for around 60% of all new car sales across Europe.
Italy leads with 16 billion euros in subsidies for fossil-fuel company cars. Germany follows with 13.7 billion euros in subsidies. Additionally, France and Poland contribute 6.4 billion euros and 6.1 billion euros annually, respectively.
Many companies provide cars as benefits for employees, often with substantial tax subsidies. These include deductions for consumer taxes and fuel usage.
The study also revealed that about 15 billion euros of subsidies go toward SUVs in the four countries. Company car drivers receive an average tax benefit of 6,800 euros annually, reaching up to 21,600 euros for higher-polluting larger models.
“This is completely illogical and completely unacceptable, that we’re still pouring billions of taxpayer money into a technology that’s completely contradictory to the European Commission’s green transition agenda,” T&E’s director of fleets Stef Cornelis told Reuters.
The study was released as Europe’s electric vehicle (EV) sales have dropped, partly because EVs are pricier than fossil-fuel models and unaffordable for many.
In August, sales of fully electric cars in the European Union dropped by 43.9%. Germany and France, the largest EV markets, experienced decreases of 68.8% and 33.1%, respectively.
The ERM study revealed that only the former EU member, the United Kingdom, offers financial incentives for company car drivers. These incentives encourage drivers to switch to electric vehicles (EVs). #EUFossilSubsidies
European Commission President Ursula von der Leyen wrote to Wopke Hoekstra, the EU’s new climate chief, on Sept. 17. She highlighted that one of his main tasks is to propose plans to phase out fossil-fuel subsidies.
Phasing Out EU Fossil Subsidies for a Sustainable Future
Therefore, many environmental groups are calling for a shift in policy. They emphasize the need to phase out EU fossil subsidies and redirect support toward clean energy vehicles. Reducing these subsidies could greatly help accelerate the transition to a sustainable future across Europe.
