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EVS28
KINTEX, Korea, May 3-6, 2015
Comparative Study on Electric Vehicle Policies between
Korea and EU Countries
Sang kyu HWANG
Chief Director and Senior Research Fellow, The Korea Transport Institute (KOTI), South Korea,
Co-founder of Korea Electric Vehicle Leaders Association(KELA), skhwang@koti.re.kr
Abstract
To significantly reduce greenhouse gas, the Korean government announced an ambitious EV deployment
plan in 2010. According to that plan, one millions EVs would be provided by 2020. However, the target of
EV deployment was not achieved despite strong political support. As a result, the government modified the
initial plan by reducing the target number of EVs from 1 million to 200,000. Many EV experts thought the
issue arose from poor policy framework and implementation process. The purpose of this paper is to find
relevant policy direction in Korea by comparing the policy formulation and implementation process
between EU countries and Korea. Concerning policy formulation, we examined the legislation and
planning process to know what to prepare for successful EV policy framework. And for the policy
implementing process, we analyzed various incentive measures on how to stimulate the deployment of EV.
With comparative research results EV policy implications are drawn.
Keywords: EV, policy framework, subsidy, tax incentives, Korea, Germany, France, Netherlands, Norway
1. Introduction
Most countries will meet against the reduction of
greenhouse gas (GHG) for sustainable
development. South Korea is a nation facing a
similar situation. More than 20% of fossil energy
is used in the transport sector and the increasing
rate of energy consumption did not changed as
Korea’s national economy grew quickly from the
1980s. To significantly reduce GHS, the Korean
government announced an ambitious EV
deployment plan in 2010. According to that plan,
one millions EVs would be provided by 2020.
However, the target of EV deployment was not
achieved despite strong political support. The
current number of EVs deployed in Korea
numbers approximately 2,500. As a result, the
government modified the initial plan by reducing
the target number of EVs from 1 million to
200,000. Many EV experts thought that this result
arose from irrelevant policy framework and their
implementation process.
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The purpose of this paper is to propose a relevant
policy direction in Korea by comparing the policy
formulation and implementation process between
EU countries and Korea. To do that, we selected
three EU countries including France, Germany,
Netherlands and Norway. Concerning the policy
formulation, I examined the legislation and
planning process to know what to prepare EV
policy framework. And for the policy
implementing process, I analyzed various
incentive measures on how to stimulate the
deployment of EV. With comparative research
results, I draw EV policy implications for the
future.
2. Electric Vehicle Policy
Framework in Korea
2.1 Brief Summary on EV Deployment
Korea has been pursuing a green car policy and
running various pilot projects to deploy them from
2005. In 2010, the green car road map was
released for reducing GHG. According to that plan
1 million BEVs should be provided by 2020. To
achieve this goal the Korean government enacted
two acts for EV R&D and deployment and also
organized the implementing structures at the
central governmental level.
Many local governments have participated in EV
pilot projects. Seoul and Jeju have concentrated on
EV policy deployment to reduce externalities
caused by the transport sector by replacing internal
combustion engine (ICE) vehicles with EV buses
and taxis. The new governor of Jeju Island
announced recently that by 2030 almost all ICE
cars would be replaced with EVs running on
electricity generated by wind power.
Despite the substantial support by central and local
governments, EVs were deployed as per
expectations. And the economic incentive, which
was an important incentive to deploy EV, would be
reduced soon due to financial limitations.
In Korea, 3,044 EVs and 3,201 recharging
infrastructures were provided. But, it was only 8.7%
of the EV deployment target (35,100) in 2014,
even though huge subsidies were assigned from
central and local governments As a result, EV
policy in Korea may be amidst an inflection point.
Figure 1: EV Subsidy (Euro) and EV deployment
accumulated in Korea
2.2 Major Characteristics of EV Policy
Framework in Korea
As mentioned above, the major reasons the policy
target was not achieved may have resulted from
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policy formulation or implementation process. In
this context we reviewed the legislation,
organization and implementing measures for
stimulating EV deployment.
2.2.1 Legislation for EV Deployment
Threes acts for stimulating EV deployment were
enacted since the early 2000s; Law for Eco-
Friendly Cars R&D(2004), Law for Low Carbon-
Green Growth (2010), and Law for Sustainable
Transport Development (2011).
The purpose of the Law for Eco-Friendly Cars
R&D(2004) is to encourage the consistent
development of the automobile industry by threes
ministries; Ministry of Trade, Industry and
Energy(MOTIE), Ministry of Environment(MOE),
and Ministry of Land, Infrastructure and Transport
(MOLIT). The law was passed in 2004 and
partially revised in 2008 and 2012. This law could
be characterized as the first legislation for
stipulating R&D and environment-friendly vehicle
deployment. It served also to boost environment-
friendly vehicle industries.
Compared to the Law for Eco-Friendly Cars R&D
(2004), the Law for Low Carbon-Green Growth
(2010) aimed to promote development of the
national economy by a low carbon-green growth
strategy so as to pursue harmonized development
of the economy and environment. This law can be
characterized as the first law integrating both
national and local strategies for greenhouse gas
reduction and green growth at the same time.
The Law for Sustainable Transport Development
(2011) mentioned the role of national government
for EV deployment policy in restructuring national
transport system in a sustainable way.
Table 1: Characteristics of two laws related to EV policy and technology
Type
Law for Eco-Friendly Cars R&D (2004)
Law for Low Carbon-Green Growth (2010)
Purposes
▪ Original law that mentions the development
and distribution of environment-friendly
motor vehicles
▪ National strategy for greenhouse gas
reduction and green growth
Major
contents
▪ Definition of environment-friendly motor
vehicles, establishment of annual plans
▪ Background of distribution support
▪ Background to national GHG reduction
▪ Responsibilities of national and local
governments
▪ National strategy for green growth
Roles
setting
▪ MOIE: EV development
▪ MOE: EV deployment
▪ MOLIT: EV safety guideline
▪ Composition of Presidential Committee on
Green Growth
▪ Coordination for controversial issues among
ministries
2.2.2 Implementing Organizations and Their
Set Roles
In order to implement the EV policy, the
Framework Act on Low Carbon, Green Growth
instituted their roles among the Ministry of Trade,
Industry and Energy (MOTIE), Ministry of
Environment (MOE), and Ministry of Land,
Infrastructure and Transport (MOLIT). The
Presidential Committee on Green Growth (PCGG)
played a key role in mediating controversial
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problems raised by the three ministries.
Ministry of Trade, Industry and Energy:
EV R&D and Industry Promotion
The MOTIE shall be responsible for technology
development and the construction of energy-
charging infrastructure for environment-friendly
motor vehicles. For this purpose, the MOTIE shall
establish the development plans and charging
equipment distribution plan. Its major tasks
include economic measures for the promotion and
distribution of electric vehicles, establishment of
the development policy for green car core source
technology and core part local production
technology, establishment of charging stations and
smart grid, safety certificate of electric vehicles
and charging equipment, and establishment of the
standardized charging equipment policy.
Ministry of Environment: Deployment of
EV and Recharging Infrastructure
The MOE shall be responsible for the distribution
of environment-friendly motor vehicles. For this
purpose, it shall lead the pioneering business for
the substantive distribution of environment-
friendly motor vehicles. Its major tasks include the
setting of the electric vehicle distribution goal,
subsidy support, expansion of the distribution of
electric vehicle charging equipment, execution of
electric vehicle leading city business, green car
mandatory purchase and sale ratio adjustment, and
establishment of environment-related regulations.
Ministry of Land, Infrastructure and
Transport: EV Safety Regulations
The MOLIT shall establish the safety standards for
automobiles, focusing on electric vehicles, and
suggest the improvement directions for the parking
lots necessary for the construction of the charging
infrastructure. In January 2009, the MOLIT
revised the Guidelines on Vehicle Safety, thereby
establishing the safety standard on electric
vehicles, such as regenerative braking, high
voltage devices and battery.
Presidential Committee on Green Growth:
Control Tower of EV Policy
The PCGG was established under the direct
control of the President in order to execute "low
carbon, green growth" which was presented as the
national vision in 2008, as the national task.
PCGG had a powerful role to harmonize
controversial issues among ministries. In particular,
major conflicts have been raised between MOE
and MOLTI. For example, MOE wanted to reduce
greenhouse gases through providing more electric
vehicles as soon as possible. But MOLTI insisted
on balancing support between the conventional car
industry and EV industry. Also there were conflicts
in using governmental subsidy among stakeholders.
PCGG played the role of a control tower to
coordinate different opinions among the
stakeholders and also checked the processing of
EV deployment. After the last presidential election
(2012), the Office for Government Policy
Coordination took over role of PCGG, but the
function of control tower did not work as well
compared to PCGG.
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Figure 2: Controversial issues among ministries in Korea
2.2.3 EV Deployment Plan
Korean government announced the Green Car
Industry Stimulation Plan with intensive
preparation over six months. The vision of that
plan is for the nation to become one of the world’s
top-four green car technology players by 2020. To
achieve the goal, targets of green car deployment
was proposed; 1 million electric vehicles, 405
thousand hybrid vehicles, and 1.8 million clean
diesel vehicles by 2020. However, this plan was
modified in 2012 by reducing their targets.
Since 2012, MOE supported an intense
deployment of electric vehicles by selecting 10
cities as EV test beds. Central and local
governments supported this measure by providing
EV purchase subsidies to recover the price gap
between EV and ICE vehicles..
Figure 3: Overviews on legislation and planning process in Korea
3. Comparison of EV Policy
Framework in Formulation and
Implementation
As indicated in the previous section, the Korean
government could be regarded as a nation that well
prepared policy framework for EV. In particular,
the level of subsidy was relatively higher
compared to other countries. But despite the policy
framework EVs were not sold to the degree of
expectations.
In this section, in order to know the cause of such
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weak results, we compared the EV policy
framework between EU countries and Korea in
terms of policy formulation and implementation
process. France, Germany, Netherlands and
Norway were selected from among EU countries.
Concerning the policy formulation, we have
compared the legislation and planning process.
And for policy implementing process, we
compared incentive measures for deployment of
EV.
3.1 Germany
In Germany, four ministries have been involved in
decision making for EV policy; BMWi (Federal
Ministry of Economics and Technology), BMVBS
(Federal Ministry of Transport, Building and Urban
Affaire), BMU (Federal Ministry of for the
Environment, Nature Conservation and Nuclear
Safety) and BMBF (Federal Ministry of Education
and Research). Concerning a national EV Plan, a
National Development Plan for Electric Mobility
(NEPE) was adopted in August 2009. According to
this plan, 1 million EVs would be deployed by
2020. To achieve the goal, a national platform for
electro mobility (NPE) was established in 2010.
The goal was to deliver concrete proposals that
help achieve the targets set out in the NEPE.
Figure 4: EV policy framework in Germany
In May 2011, the federal government released a
national government program based on the NPE’s
second interim report. It defined solid measures to
support R&D activities, EV-system development,
educational programs, standardization procedures,
and development of infrastructure and electricity
generation. To promote EV sales in the
marketplace, economic incentives and tax
exemptions were provided for EV buyers and car
manufactures.
3.2 France
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In France, two ministries are leading in decision
making for EV policy; Ministry of Ecology,
Sustainable Development and Energy and Ministry
of Economy, Finances and Industry. An EV
committee constituted by several ministries
prepared their EV deployment plan. A national
plan for EV development was released in 2009
stipulating that French car manufacturers would
deploy two million vehicles by 2020 and 4.5
million by 2025. The 2020 target of French EV
deployment is twice of that of Germany. public
enterprises such as La Poste (French national post),
EDF (Électricité de France, French national utility)
and 12 local municipalities brought 50,000
vehicles over 5 years to guarantee EV demand for
OEM (car manufactures).
In order to insure the supply of appropriate
recharging infrastructure, legislation stimulated
that all parking units of newly constructed
buildings should be equipped with electricity
outlets. Numerous EV demonstration and test
projects have also been launched. These projects
tested infrastructure and vehicle technologies as
well as consumer behavior and business models.
EVs benefit from the highest bonus in an emission
based fee and rebate (bonus-malus) system. Until
July 2012, this bonus amounted to EUR 5,000 per
vehicle at a maximum 20% of the purchase price.
Figure 5: EV policy framework in France
3.3 The Netherlands
In the Netherlands, two ministries have been
involved in decision making for EV policy;
Ministry of Infrastructure and the Environment
and Ministry of Economic Affairs. In 2009, the
Ministry of Infrastructure and the Environment
announced their action plan and Formula E-Team
to support EV deployment. Three main actions of
Formula E-Team were defined in the action plan.
Their first task was to establish Formula E-Team
comprising of individuals from industries essential
to deploying EVs. Second is to define and prepare
implementation program measures and fiscal
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measures; EV charging infrastructure, establish
purchasing consortia, and purchase or vehicle tax
exemptions. Third is to coordinated and phase
development of an EV market to insure that the
right actions are taken at the right time while
retaining the highest possible level of flexibility.
A supporting policy package was put in place that
ranges from measures supporting communication
and international collaboration and measures
supporting research activities, to the definition of
lead customers (the government) and safety
standards. Fiscal measures are provided for EV
buyers in the form of tax exemptions: tax
exemption from purchase tax on new passenger
cars and motorcycles until 2018, tax exemption
from road tax until 2018, and tax exemption from
income tax surcharge for leased cars until 2014. In
addition, fiscal grants were provided for
companies to invest in charging stations.
Figure 6: EV policy framework in the Netherlands
3.4 Norway
Three ministries have been involved in decision
making for EV policy; Ministry of Finance,
Ministry of Transport and Communications, and
Ministry of Environment.
The Ministry of Transport and Communications
prepared the White Paper for Climate Change and
the Action Plan for the Electrification of Road
Transport in 2009 by deploying more than 200,000
EVs on Norwegian roads by 2020. To achieve this
target, Research Council of Norway, Innovation
Norway, Transnova and local cities have
participated and cooperated for implementation of
the action plan. As a result, Norway attained the
worldwide highest EV share of recently sold
vehicles. Norway’s EV success is certainly due to
comparatively strong and comprehensive fiscal
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and non-fiscal purchase incentives that have both
been stipulated on a national level. These
incentives include EVs have access to bus lanes,
benefit from free public parking, and are exempt
from 25% VAT, registration taxes, and road and
ferry tolls.
Figure 7: EV policy framework in Norway
4. Lessons from Policy Framework
Comparison
Among EU countries, Germany and France have
world class car manufactures and EV policy within
such countries might be likely influenced by them.
Therefore, the target of EV policy was focused
more on automobile industry revitalization rather
than on the reduction GHG by deploying EVs. On
the other hand, Netherlands and Norway did not
have EV car manufactures. So, for them it seems
to be relatively easier to increase EVs with lower
prices thanks to competitions among OEMs of
other nations. They did not need to worry about
the market share of their own EV models like in
the case of Germany or France.
Differences were also found in the approaches to
deploying EVs among EU countries. In France and
Germany, OEMs or clusters have played key roles
to deploy EV by developing EV business models.
In general, OEMs were involved in grand pilot
projects for developing EV technologies with
national R&D programs so they could rely on
governmental subsidy to bridge the purchase price
gap between ICE cars and EV. On the other hand,
in Norway and the Netherlands, local governments
have more initiative to deploy EV. For examples,
in Norway’s capital city of Oslo, EV are permitted
EV to run in exclusive bus lanes. In other words,
they preferred to increase EV usage utilities
(permitted usage of bus lane, exclusive EV parking
lots) rather than EV purchase utilities (subsidy or
tax exemption).
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Table 2: Summary of EV policy framework in select EU countries and Korea
Countries
EV Plan
EV Target (2020)
Current no. of EV(2014)
Key Implementing Org. and
Major Incentive Measures
France
National Plan for EV &
PHEV(2009)1)
2 million
29,000 (1.4%)
OEM oriented
Bonus-malus
Germany
National Development Plan
for Electric Mobility(2009)2)
1 million
12,000 (1.2%)
NPE
No federal subsidy
Netherlands
National Action Plan(2009)3)
200,000
Formula E-Team
Subsidy, tax exemptions
Norway
Action Plan for the
Electrification of Road
Transport (2009)
200,000
Local government oriented
Subsidy, tax exemptions
Korea
Green Car Industry
Stimulation Plan (2010)
200,000
3,044 (8.7%)
GGC (Ex-PCGG)
Subsidy, tax exemptions
* Remarks : 1) Le plan véhicules électriques et hybrides(2009), 2) Nationaler Entwicklungsplan Elektromobilität der
Bundesregierung(2009), 3) Plan van aanpak elektrisch rijden(2009)
Figure 8: ICE CO2 emissions in transport sector (up)
and EV deployment levels (down)
In summary, governing structure in EU countries
is similar in the sense that not only most federal
governments engaged deeply in the decision
process, but they also prepared a national plan for
the EV deployment. During the implementation
process, most countries formed multi-ministerial
organizations under federal governments for
assignment of roles among stake-holders (central
and local governments, public or private
enterprises, etc.). And in many cases national
enterprises participated in EV pilot projects to
provide more EVs with substantial support from
governments in the form of tax exemptions or
subsidies.
In general, the policy framework in Korea is
relatively similar to that of Germany and France in
terms of policy formulation. Normally, the central
government took the key role in setting the target
of EV deployment and took charge for distribution
of subsidies among local government. As a result,
it was inevitable to rely on governmental subsidies.
But, in the near future the number of EVs sold in
the market will drop significantly as subsidies will
decreased due of national budgetary restraints. For
this reason many experts are worried about an “EV
sales cliff” which could result in the face of a lack
of subsidies.
In particular, it would be difficult for OEMs to
expect to lower vehicle costs by themselves as the
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government continues to give subsidies to EV
purchasers. Therefore, it would be rational to
change EV policy direction from subsidy-oriented
policy to businesses model-based policy to
encourage the private sector to provide EVs with
lower price and high performance. It would be
more effective to increase the utilities for EV
usage rather than the utilities for EV purchase, as
we have seen in Norway.
Figure 9: Inflection point of EV policy in Korea
References
[1] Sang Kyu Hwang, Strategies for developing
sustainable transport policies through behavioral
analysis on e-mobility and car-sharing, Seoul,
Korea Transport Institute, 2014.
[2] Leurent, F., Windisch, E., Triggering the
development of electric mobility: A review of
public policies. European Transport Research
Review. 3 ( 4 ), pp. 221-235.
[3] TOI, Electromobiliy in Norwary: Experiences
and Opportunities with Electric Vehicles, p. 25~26,
2014
Author
Sang kyu Hwang is Senior Research Fellows,
Director of Comprehensive Transport at KOTI. He
received his Ph.D. degree in transport from
University of Paris 12, after DEA degree in
transport at ENPC (Paris Tech). He contributed the
establishment of EV Policy Leader’s Forum
(KELA). He has worked over 20 years at diverse
transport research areas such as transport economy,
urban transport and sustainable transport.
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