Business Irish

Sunday 25 February 2018

Pollution taxes transform our car choices with switch to diesel

Mark Keenan

Mark Keenan

THE nation's car-buying habits have been transformed over a five-year period as new taxes on pollution encouraged drivers to switch to diesel from petrol, new figures show.

Almost three-quarters of drivers opt for diesel-powered cars today compared with just over a quarter in 2007, the Society of the Irish Motoring Industry said yesterday.

Business car fleets are now almost entirely diesel. Around 60pc of new-car sales are company cars.

Although improvements in diesel car design mean they are faster, quieter and cheaper to run, the sea-change in fuel usage habits is being credited to the 2008 overhaul of the vehicle registration tax (VRT) and tax systems introduced by Environment Minister John Gormley in the last government.

The Green Party minister was trying to bring down fuel carbon emissions.

The legislation changed the system to base the tax on emissions rather than on engine size.

"The 2008 legislation means that on a Band B vehicle, the buyer of a diesel car saves around €3,000 on the purchase of the vehicle and then another €400 to €600 on road tax," says Alan Nolan of the SIMI.

"Ironically it also means that the Government has drastically cut its tax take from car sales, which have reduced sharply in any case and this is why some form of new alteration to the way cars are taxed is already on the way."

Ireland's diesel car penetration of 73pc compares with 51pc in Britain, where diesel has eclipsed petrol for the first time.

Oliver Lupton of the Forecourt Bureau of Ireland, which researches and analyses trends in the motor fuel industry, says that in the long run we can expect diesel to become more expensive.

"Every barrel of fresh crude comes with so much diesel and so much petrol. You can't have one without the other. So if everyone wants diesel and not petrol, then the petrol has to be stored and thus subsidised by diesel. We've already seen diesel prices exceed petrol's last year and that will eventually end up happening again."


Industry sources believe that the scenario where diesel is more expensive is perhaps two or three years away.

"That said, diesel presents an operating efficiency of 35pc to 43pc -- the amount of the gallon that becomes energy -- while petrol is at 25pc," says Mr Lupton.

"Diesel is considerably less toxic than petrol -- it's used for everything and it doesn't require any serious refining. In Ireland, more of us are commuting, so it suits those taking longer journeys."

However, SIMI says that there will eventually be a swing back to petrol, as the motor industry is already at work developing more efficient petrol engines.

Irish Independent

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