The financial and environmental costs and benefits for Norwegian electric car subsidies: are they good public policy?

Abstract

Norway is the current per-capita leader in battery-electric vehicle (BEV) sales due in large part to generous government subsidies for BEV buyers. These subsidies are designed to support the government’s goal of electrifying 20% of Norway’s vehicle fleet to reduce national greenhouse gas emissions. Norway is not alone in its support of vehicle electrification, as many public policy makers around the world also use EV subsidies as a means of achieving emission reduction goals. Despite their widespread presence, however, very little analysis has examined the cost of the subsidies relative to the value of the consequent environmental and social benefits. This research uses a variety of scenarios to calculate the costs and benefits of Norwegian EV supports, and the general finding is that subsidy costs are much higher than the environmental benefits, resulting in negative ROIs. Implications of the Norwegian results for public policy makers in other countries are then discussed.