16 June 2014. Santiago, Chile.
Thumbnail photo: Puegot 008 HYbrid4 diesel-electric hybrid.
The government of Chile has proposed new taxes on diesel powered autos and light trucks. These taxes are agreed in principle by the congress and await final passage.
The taxes are part of the overall tax reform promised by President Bachelet to raise $8 billion to finance an education overall that would make university tuition free and end the practice of parents paying to send their children to subsidized public schools.
One might say these taxes are good if the goal is to reduce the PM2.5 pollution. PM 2.5 is particulate matter or airborne contaminants of 2.5 microns or less in size. They are particularly dangerous to the health, because they can penetrate deeply into the lungs. Santiago is only weeks away from being declared “saturated” with PM2.5 pollution by the government, because PM2.5 pollution has reached crisis levels. This is a first step in writing a new pollution reduction plan for the city, which would conceivably call for tighter vehicle emission standards.
One could conclude that the government approach has taken politics into consideration, as governments sometimes must do in order to get its ideas passed into law. Because the common sense approach would be to simply increase the vehicle emission standards in Chile.
A logical person would also ask: (a) why does the government continue paying a subsidy on diesel fuel, thus encouraging its use, and (b) why doesn’t the government apply this tax to heavy vehicles as well, like the 6,500 diesel fuel buses in the Transantiago fleet?
Ricardo Katz is a researcher at Center for Public studies. In a detailed paper published by that organization he reviewed the new tax regulations as they relate to green environment-friendly policies.
In his report he says:
In this same context, the tax reform only taxes the import of light diesel vehicles. It does not tax their emissions and is not a environmental tax. Furthermore, it discriminates with regard to the rest of the universe of diesel vehicles and leaves out certain details to be addressed by regulators.
Currently vehicle fuel emission standards in Chile are Euro III for heavy vehicles. Those lag the European standards by 14 years. (We have not yet studied in detail passenger emission standards, having focused first on heavy vehicles.) Europe is now at the Euro V and Euro VI standard for all vehicles. If the standards were stricter, there would be no reason to repeal the diesel fuel subsidy to discourage the use of diesel fuel in favor of new cleaner vehicles. Those diesel subsides was passed into law some decades ago, when truckers protested high fuel costs.
The New York Times reports that Europeans are increasing their purchases of light diesel fuel vehicles now, because of the lower price for diesel fuel there. Because of that, Exxon Mobile is expanding its diesel refinery in Belgium.
European, America, and Asian car manufacturers already build diesel fuel autos to meet the strict European VI vehicle emission standards. Those cleaner-burning vehicles are not imported to Chile yet in large numbers, because current emission standards do not require that.
Filters designed to contain PM2.5 pollution on Euro III vehicles do not work as well as Euro V or Euro VI vehicles, in part, because they tend to clog up as vehicles drive slow in heavy traffic. These filters work best at higher vehicle speeds. So cleaner vehicles need to use the more advanced technology already deployed in developed nations.
El Mercurio reports that European and American automobile manufacturers have written to the government to complain about the new taxes. Asian manufacturers have complained as well. El Mercurio cites a letter from the American Automotive Policy Council and the European Automobile Manufacturers Association which reads in part:
Due to advancements in diesel emissions technology such as CRDI (Common Real Direct Injection), DPF (Diesel Particulate Filter), and NOx catalytic converters, etc., diesel power vehicles meet the latest standard and are extremely clean.
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