COMMENT & ANALYSIS: Around the world, there’s different of types of incentives to enable and encourage people to buy electric or cargo bicycles. Here in Ireland, the Green Party has come under sustained criticism for incentivising electric cars while not doing the same for more expensive types of bicycles that can replace car trips and, for some, to replace their car or second car. Will this be fixed in the early Budget in September?
Electric and cargo bikes allow cycling to be more like a car-replacement, at least for most daily trips for many people. But these bicycles are out of the price range of many people and others need a bit of a push to buy then.
So, it’s stark that there’s generous incentives for cars but none for bicycles besides the Cycle to Work scheme which is limited and excludes anybody who isn’t a PAYE employee and doesn’t cover incentives for businesses.
Grants for electric cars range from €2,500 to €5,000, there’s also Vehicle Registration Tax (VRT) relief up to a maximum amount of €5,000 (which basically mean 0% VRT for most cars), and then there’s also a further €600 available towards the purchase and installation of an electric vehicle home charger unit. There’s also lower motor tax and half price tolls at least to the end of this year. There’s also grants for businesses.
While it’s not as strange forward as saying motorists are each getting €10,600+ in incentives, the amount per person seems to be generally lower depending on the car chosen etc, but it’s still a huge amount of incentives for a vehicle that will be charged off the national grid which is a long way from becoming carbon neutral (a minority of people will be able to charge their car off-grid, but they are a minority).
VAT rate reduction alone won’t cut it
IrishCycle.com reported in December 2021 that 0% VAT on bicycles, servicing and rental in Ireland was to be examined following EU rule change. However by July of this year it had became clear that 0% VAT has been ruled out at EU-level and there was now a choice to drop VAT from 23% 13.5% or 9%.
Given that the 0% was being talked about at EU level before the rules were finalised, it would look bad if an apparently-green focused Government only reduces VAT to 13.5% when the EU is not stopping them from reducing it to 9%.
The planned VAT reduction is part of an EU-level initiative which allows member states to reduce the rate, it is on top of grants and other incentives used across Europe already implemented or planned. A VAT reduction alone would be weak compared to what’s happening elsewhere or even just compared to car incentives.
Grants and other options
A DLRCC-based Green Party, Cllr Oisín O’Connor, tweeted at at end of July: “I asked this week and got confirmation that officials in Minister Ryan’s department are preparing a grant scheme for all kinds of electric bikes. Hopefully will be launched in Budget 2023.”
Nearly any time the Greens have been asked about bicycles grants etc, they have responded by saying it’s a budget issue — so, that argument won’t stand if there’s no incentives except a VAT reduction in the Budget next month.
Grants would be a huge welcome, but there’s two issues — electric cargo bikes cost thousands of euro, so, the grants for in Europe reflect this by typically ranging from €1,000 to €2,000 per bike (the lowest end is around €500 while the highest this website could find is €2,500).
Normal electric bicycles grants also vary but around €500 isn’t uncommon. Some places also offer grants for non-electric cargo bicycles around €500-€1,000 — it doesn’t make much sense if electric cargo bikes would get grants but not the non-electric versions which can do the same job for half the price for people who can get by without electric assist.
Across Europe, grants are sometimes capped at something between 25-50% of the value of the bike. Maybe surprisingly a cap of 40-50% of the value seems to be more common than the lower end.
The Greens and any politician in Government who’s supportive of cycling shouldn’t be looking for the lower ends of these grants or caps. This is especially given the cost of living crisis and higher costs of some of these bikes in Ireland, partly relating to deliver and that we’re a small market.
The second issue is are grants best solution on their own? Especially if the lower end of grants or the percentage of the bike is capped at the low end — if you’re not able to afford a cargo bike and the grant is capped at 25% of the purchase price, you still have to pony up 75% of the cost.
If there’s just grants and there’s no extra incentives for people on lower incomes, the Greens risk the grants being not great for lower and middle income households who need the incentives the most.
This is where Government-backed zero interest loans might help. This could be offered as an alternative to the Cycle to Work scheme.
There’s no way to expand the Cycle to Work scheme, it’s not possible — it only works for PAYE employees (and not even so where employers refuse to take part in the scheme). It excludes the self-employed, the unemployed or underemployed, retirees, carers, homemakers, school-goers, third level students and businesses.
Zero-interest loans would offer people to pay over time without interest payments — this would at least partly mirror the benefit of paying over time that is in the Cycle to Work scheme.
In Scotland, the Government there offers interest-free loans for individuals and businesses with no administrative fees are offered via the Energy Saving Trust (the equivalent of the Sustainable Energy Authority of Ireland) for cargo bicycles and electric bicycles.
In Vermont, in the US, there are both grants and zero interest loans via credit unions for households with an income below $78,600. They also here is also an “E-bike Lending Library” to try before you buy, similar initiative are operated by councils in the UK.
What ever systems are chosen, there should also be extra funding set aside for higher supports for buying adapted cycles for people with disabilities who want to cycle, and also funding for people on welfare. The latter might be more novel, but progress needs to be made so that people aren’t left behind.
If time is needed to finalise anything, the funding should be allocated in the budget and the processes put in place as soon as possible. After Budget day, I don’t think many people will kindly accept the idea that it’ll have to wait until the next budget. Given the need to ramp up supply and for public awareness, one in place, it will take a while to see real benefits. So, if the Government is serious about reducing emissions and also getting people active, then progress needs to start now.
There’s a lot of kite flying and uncertainty generally ahead of the budget, so, we’ll only know for sure on Budget day.