Rwanda Joins Global Pledge to End Sale of Polluting Vehicles By 2040

11 November 2021

Rwanda has joined a group of countries that, yesterday at the COP26 UN climate talks, declared to end polluting vehicles by 2040.

The signatories include 24 governments, 8 developing countries and emerging economies, 40 cities, states and regional governments, 11 Automotive manufacturers, 27, Fleet owners and operators or shared mobility platforms, 13 Investors with significant shareholdings in automotive manufacturers, two Financial institutions and other 17 Other signatories.

"As governments, we will work towards all sales of new cars and vans being zero-emission by 2040 or earlier, or by no later than 2035 in leading markets," reads a joint statement.

The commitment seeks to rapidly accelerate the transition to zero-emission vehicles to achieve the goals of the Paris Agreement.

Paris deal aims to limit global warming to 2 Degree Celsius with an ambitious target to reach 1.5 Degree Celsius.

The pledge calls on all developed countries to strengthen the collaboration and international support offer to facilitate a global, equitable and just transition.

The declaration was signed by governments, cities and states, automotive manufacturers, business fleet owners and operators, investors, financial institutions, among others.

The governments have committed to putting in place policies that will enable, accelerate, or incentivise the transition to zero-emission vehicles as soon as possible.

Governments in emerging markets and developing economies have pledged to work intensely towards accelerated proliferation and adoption of zero-emission vehicles.

"We call on all developed countries to strengthen the collaboration for a global, equitable and just transition," they said in a joint statement.

we confirm our support for an accelerated transition to zero-emission vehicles in line with achieving 100 per cent new car and van sales being zero-emission in leading markets by 2035, supported by making capital and financial products available to enable this transition for consumers, businesses, charging infrastructure and manufacturers, financial institutions also declared.

The signatories say the transition presents new opportunities for clean growth, green jobs and public health benefits from improving air quality.

"This transition could also boost energy security and help balance electricity grids as we make the transition to clean power," they said.

In the declaration, leading markets pledged support for developing countries, emerging markets, and transitional economies - including, where applicable, through technical assistance, finance, and capacity building.

We will work together to overcome strategic, political, and technical barriers, adds the declaration.

The parties have also committed to work together to boost investment, bring down costs and increase the uptake of zero-emission vehicles.

Rwanda's progress on electric vehicles

In April this year, a cabinet meeting held on Wednesday, April 15 approved a strategy for electric mobility adoption aiming at increasing electric vehicles and motorcycles.

In an effort to reduce the cost of ownership and maintenance of electric vehicles, the strategy approved by cabinet exempted import and excise duties on electric vehicles, spare parts, batteries and charging station equipment.

The incentives also zero-rated Value Added Tax for electric vehicles, spare parts, batteries and charging station equipment.

Ordinarily, vehicle imports have to settle a bill of 25 per cent import duty, 18 per cent VAT, five per cent to 15 per cent excise duty, depending on the size of the engine

These taxes and levies drive up the cost of shipping a car into the country, where and often being more than the purchase price of the vehicle from the source market.

The withholding tax of 5 per cent of spare parts, batteries and other equipment will also be exempted

Electric vehicles' adoption process in the country will also be facilitated by rent-free land for charging stations for land owned by the government further reducing the cost of set up and maintenance.

The building code and city planning rules will also include provisions for electric vehicle charging stations. This is expected to reduce the complexity of the process for interested parties

To increase chances of Rwanda being a producer for electric vehicles, batteries and other inputs, the government has rolled out incentives in the investment code such as 15 per cent Corporate Income Tax (CIT) and tax holiday for companies manufacturing and assembling electric vehicles.

Commercial electric vehicles will also have ease of market entry as the new list of incentives provides for free license and authorisation for commercial electric vehicles.

The government will also de-risk the business by guaranteeing market, where preference will be given to electric vehicles for government-hired fleet. In the short term, Rwanda aims to reduce emissions by 38 per cent by 2030 with electric vehicles are estimated to represent 9 per cent of potential energy-related emissions mitigated under the country's ten-year climate action plan.

Although incentives for electric vehicles are yet to fully take effect, Alfred Byiringiro, Director General for Transport in the Ministry of Infrastructure, told The New Times, last month, that the government was reviewing the incentive implementation process as some have already been implemented.

Rwanda currently has over 221,000 registered vehicles, with 52 percent being motorcycles and 38 percent being passenger vehicles, with at least 30,000 in Kigali.

The government had set a target to convert 30 per cent of motorbikes, 8 per cent of cars, 20 per cent of buses, and 25 per cent of small and microbuses to electric power by 2030.

According to studies, transition to use of electric motorcycles could economically result in an "annual reduction of approximately Rwf23 billion in fuel imports.

Over $1 billion is needed to convert 20 per cent of personal motor vehicles to electric vehicles including supporting infrastructure by 2030 according to Rwanda Green Fund.

The climate fund requires $150 million to convert 20 percent of buses into electric vehicles by 2030.

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