Subsidies for Replacing Phase One and Two Heavy-Duty Diesel Vehicles


On 25 June 2018, the Legislative Yuan passed the amendments to the Air Pollution Control Act on the third reading. In accordance with the amendments, the EPA is to tighten the emission standards for the vehicles currently in use based on the needs of air quality improvement. However, before the official regulations are fully developed and put into effect, the EPA has been implementing incentives in advance, including the Regulations Governing Subsidies for Scrapping Large Old Diesel Vehicles promulgated on 16 August 2017. The aforementioned regulations provide a subsidy of NT$50,000 to NT$400,000 (based on vehicle weight) for each old diesel vehicle weighing more than 3.5 tons and classified in Phase 1 or 2, which works out to an average of NT$20,000 for each vehicle.

According to the Regulations Governing Subsidies for Particulate Filter Installation on Heavy-Duty Diesel Vehicles announced on 8 August 2017, any heavy-duty diesel vehicle that is classified in phase three of the emission standards (manufactured on or before 30 September 2006) is offered a subsidy of NT$70,000 to NT$150,000, depending on the efficiency of the filters. The Ministry of Finance is also assisting the EPA to implement this policy by providing a commodity tax refund of NT$50,000 to owners of old Phase 1 and 2 diesel trucks that weigh more than 3.5 tons when they purchase a newer replacement.

The above mentioned regulations have expedited the replacement of 13,000 Phase 1 and 2 diesel vehicles exceeding 3.5 tons in weight. Moreover, to provide diesel truck owners with more options, certified filters are being constantly selected after evaluation of their efficiency and safety.

There remains in use 79,000 heavy-duty diesel vehicles in Phase 1 and 2. In addition to the above mentioned regulations, the Incentive Program Regarding Loans to Replace Heavy-Duty Old Diesel Vehicles has also been completed. For this incentive program, the EPA is working with the Small and Medium Enterprise Credit Guarantee Fund to provide credit guarantees for up to 90 percent of the loans for new truck purchases (Table 1). Furthermore, the government will also subsidize up to one percent of the loan interest for the purchase which will gradually fall to 0.55 percent by 2022 (Table 2).

The incentive program will take effect on 1 September 2018 and is estimated to cost a total of NT$3.444 billion for subsidizing the loan interest from 2018 to 2027, or approximately NT$30,000 to NT$50,000 for each vehicle.

If combined with the subsidies for the elimination of the Phase 1 and 2 diesel trucks and for the filter installation of Phase 3 diesel trucks, at least NT$17 billion will be spent on addressing air pollution from heavy-duty vehicles. To reduce the air pollutants produced by Phase 1 and 2 diesel vehicles, the EPA aims to remove from the roads all such vehicles by 2022, which could potentially lead to reducing roughly 4,000 tons of PM2.5 emissions annually. The EPA urges the owners to replace their old diesel vehicle before the implementation of the incentive program for extra subsidies.

Environmental Protection Administration, R.O.C.(Taiwan)
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