Polluter pays: How Norway became the global leader in the electric vehicle transition

A while ago now I wrote an article on EV policy and uptake in the UK. Key to success in the UK (which in June this year saw 21.6% of new car sales being plug-in vehicles) are policies that have had long-term, bipartisan support for both climate action and policy supporting the EV transition, along with a dedicated agency for developing and implementing EV policy.

For a very different take on EV policy that works, let’s now take a look at the world leader in the EV transition: Norway. I am choosing Norway next for two reasons:

• By June this year, Norwegian sales of new plug-in passenger EVs (PEVs¹) reached 90% of all new passenger car sales and
• Norway has taken a very different policy and incentive route to that taken by most other countries.

So what’s different about Norway? Well, first-up they started on their EV Transition path long before anyone else.

Since 1990 the adoption of zero emission vehicles has been actively supported by Norwegian governments of all persuasions.

The key different though, unlike the UK and most other markets, is that Norway does not offer specific monetary subsidies to choose EV over internal combustion engine (ICE) vehicles: rather they offer significant discounts on VAT (their equivalent of our GST), registration and insurance costs for EVs.

As a result, the purchase price of a fully electric car in Norway is generally less than a hybrid or ICE version of the same vehicle. (See figure 1).

Mind-you, this does mean the price of all vehicles remains high in comparison to other markets. However, this pain is to some degree offset by EV running costs being made significantly lower than ICE ones due to legislated discounts on parking fees, ferry charges, priority access to bus lanes and the like.

Norway was also the first country to set a legislated end-dates for new ICE vehicle sales – 2025 for ICE passenger vehicles and 2035 for commercial vehicles. It is worth noting here that these bans includes hybrid electric vehicles. (i.e. those without a recharging socket).

The consequence of this combination of policies is that over the last 10 years, petrol and diesel car sales have gone from together making up almost 76% of all new passenger car sale to below 5% each. (Figure 2). Meanwhile, new PEV sales hit 90% in June this year, meaning it is effectively ‘game over’ for ICE passenger car sales in Norway well before the 2025 deadline. (Figure 3).

Alongside Norway’s support of EVs themselves is a policy to support EV charging. A feature of this policy is a national fast charge support program that has been in operation since 2011. That program provides for a minimum of two 50kW chargers per 50km on all main roads.

(One of the learnings from that program has been where it comes to public, ‘mid-point’ chargers on highways: it is best to avoid placing only one or two chargers in isolation as drivers avoid these due the chance they may be over-crowded … or broken. Circle K, Norway’s largest DC charging provider, now installs a minimum of six chargers at any such site).

Additionally, local councils have implemented policies to support the installation of chargers in apartments, stores, private companies, and shopping malls.

One example is Oslo, where an EVSE grants for a maximum of 20% of the cost of EVSE purchase and installation are available – up to the equivalent of Au$650 per individual charging point and Au$131,000 per housing association (for apartments etc).

Summing up:

Instead of subsidising EV purchases as is done in the UK (and many other countries), Norway has taken a more ‘polluter pays’ approach. This has effectively been deterring drivers from owning high emission cars through higher VAT and registration costs on ICE and non-plugin (HEV) vehicles plus incentivising the EV versus ICE choice by substantially lowering EV running costs.

In addition, Norway has worked to address the wider implications of the EV Transition through providing ongoing support for installing EV charging infrastructure in as many situations as possible.

Comparing the two cases (UK and Norway) – Norway is similar to the UK in taking consistent, long term path across all levels of government that includes the wider aspects of the EV Transition beyond just increasing EV sales.

On the other hand, the biggest difference between the two is that Norwegian policy settings raise ICE vehicle prices as compared to an EV, whilst UK policy takes a path based on subsidising EV prices to bring them closer to ICE ones.

Notes: 

1. Plug-in EVs (PEVs) are all EVs with a charging socket. This means any EV that allows the battery to be recharged from a power outlet. The PEVs category include full-battery EVs (BEVs) and plug-in hybrid EVs (PHEVs) but not hybrid EVs (HEVs).

Bryce Gaton

Bryce Gaton is an expert on electric vehicles and contributor for The Driven and Renew Economy. He has been working in the EV sector since 2008 and is currently working as EV electrical safety trainer/supervisor for the University of Melbourne. He also provides support for the EV Transition to business, government and the public through his EV Transition consultancy EVchoice.