Ms. Siv Jensen
Minister of Finance
Government of Norway
Postboks 8008 Dep
Paris, December 2nd 2015
An open letter to the Honourable Minister
Dear Honourable Minister,
We have noted with disappointment, the recent Norwegian government proposal to apply a taxation of 6.91 NOK/kg on LPG as an automotive fuel. This action, which will see pump prices for LPG in Norway increase by some 50%, will likely result in the demise of the LPG Autogas market in Norway. Not only will this lead to the closure of some 140 LPG Autogas stations in Norway (with the consequent impact on jobs), it will also remove the option of LPG as clean alternative fuel for Norwegian drivers. Clearly an increase in taxation applied to a fuel which has zero sales volume will not result in greater revenue for the treasury but rather will push consumers to consume more polluting fuels such as diesel and gasoline with the consequent negative impact on the environment.
Autogas – LPG used as a transport fuel – is the second most widely used and accepted alternative automotive fuel in use in the world today after ethanol. Global consumption of Autogas has been rising rapidly in recent years, reaching 26.4 million tonnes in 2014 – an increase of 5.1 Mt, or 24%, over the 2009 level. There are now more than 25 million Autogas vehicles in use around the world and it is truly a global success story.
The primary reason why governments in many countries actively encourage the use of Autogas and other alternative fuels is the environment. Autogas out-performs gasoline and diesel as well as some other alternative fuels in the majority of studies comparing environmental performance that have been conducted around the world. Autogas burns cleanly producing up to: 96% less nitrogen oxides (NOx) than diesel, 68% less NOx than petrol, 22% lower CO2 than petrol and 120 times less small particle emissions than diesel vehicles.
The most effective Autogas incentive policies are those that help to make the fuel more competitive against gasoline and diesel, and give a strong financial incentive for an end user to switch to Autogas. In practice, the financial attractiveness of Autogas over other fuels depends on the net cost of converting an existing gasoline vehicle (or the extra cost of a factory-built Autogas vehicle compared with an equivalent gasoline or diesel vehicle) and the pump price of Autogas relative to diesel and gasoline. Since converting a vehicle to run on Autogas involves upfront capital expenditure and some minor inconvenience (including sacrificing some boot/trunk space), the owner needs to be compensated through lower running costs, of which fuel is the most important.
With growing renewable (bio) sources of LPG, Autogas is not just today’s fuel but is a fuel for the future. Should the government of Norway decide, through its taxation policies, to extinguish the Norwegian Autogas market, it will do so in the full knowledge that it effectively closes the market, not just for one of today’s most popular cleaner vehicles, but for a future renewable transport fuel.
We strongly urge the Norwegian government to reconsider its proposed tax increase on LPG and to continue to support the use of LPG as a transportation fuel through appropriate taxation in view of its environmental performance compared to other fuels.
CEO & Managing Director