‘Punch in the Gut’: Sweden Suddenly Scraps Bonuses for ‘Climate-Smart’ Cars

Sweden is abolishing the climate bonus that is currently being paid out for the purchase of fuel-efficient and electric cars with immediate effect, the government said in a press-release.

Starting from November 8, buyers of fuel-efficient cars will no longer receive the bonus which was introduced to spark popular interest in so-called “climate-smart” vehicles. In order to be qualified as such, a car has to emit no more than 30 grams of carbon dioxide per kilometer or run on natural gas, biogas or electricity. In Sweden, climate-smart cars currently account for around half of new sales of passenger cars.

“The cost of owning and driving a climate-smart car is starting to be comparable to that of a petrol or diesel car. Therefore, the climate bonus is abolished,” the government said in a statement to explain its unexpected measure.

At the same time, the penalty tax on petrol and diesel cars, the second part of the “carrot and stick” bonus-malus system, will remain in order to contribute to the shift towards electric cars,” Economy Ministry press-secretary Niki Westerberg told Swedish media.

The scrapped support for electric cars came as a complete surprise to the country’s automotive industry in the midst of a transition.

“We are mighty surprised by this decision”, Emmi Antonsson, communications manager at the industry organization Mobility Sweden, which covers manufacturers and importers of vehicles in Sweden.

The government’s steps have also sparked criticism for failure to implement the so-called Green Switch fast enough.

Among others, former Environment Minister Per Bolund minced no words as he blasted the decision as “insane” and “nothing but madness” and accused the government of “only pretending to support climate goals and endorse electrification.”

A similar message was voiced by Rickard Nordin, Center Party climate and energy policy spokesman.

“We need to quickly get more electric cars onto our streets to reduce both oil dependence and emissions. Making electric cars tens of thousands of kroner more expensive is a hard punch in the gut to everyone who wants to be part of the transition,” Nordin told Swedish media. “Also, to increase costs in the middle of an ongoing climate summit is really burying your head in the sand”, he added, alluding to the COP27, the 2022 United Nations Climate Change Conference, held in Sharm El Sheikh, Egypt, with more than 90 heads of state and representatives of 190 countries expected to attend.

The conference has been held annually since the first UN climate agreement in 1992 and is used by governments to agree on policies to limit global temperature rises and adapt to impacts associated with climate change.

However, even environmental activists have started to become weary, slamming the conference for its lofty promises and failure to deliver. Among others, Swedish activist Greta Thunberg, who despite her peak fame being over is still venerated as a climate guru of sorts, accused COP27 of “greenwashing”, despite attending the previous one in Glasgow.

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Government incentives for electric vehicles have been established around the world to support the transition from petrol and diesel cars. These incentives include purchase rebates, tax exemptions and tax credits, as well as additional perks that ranging from access to bus lanes to fee waivers on parking. Previously, electric vehicle sales have been so popular in Sweden that financial incentives put in place to encourage adoption have been almost entirely exhausted, causing the local transport agency to pause them.

Earlier this year, the German coalition government struck a deal to reduce its subsidies for electric vehicles amid a growing energy pinch and a cost-of-living crisis.