Home > Economics FAQs Blogs > Is there a term for when the government initially encouraged the use of diesel cars but is now promoting electric cars?
This question pertains to topics in Microeconomics, such as Government Intervention, Externalities, Environment, Sustainability
There isn't a specific term for this exact situation, but it could be described as a policy reversal or a shift in policy paradigm. This change is based on the recognition of externalities – cost or benefit that affects a party who did not choose to incur that cost or benefit – associated with the consumption or production of goods or services.
Government policy can change over time in response to new information, changing priorities, or shifting public opinion. Initially, diesel cars may have been promoted due to their fuel efficiency and lower CO2 emissions compared to petrol cars. However, further scientific research has revealed that diesel cars emit a significant amount of NOx gases, which are harmful to human health and the environment.
In contrast, electric cars produce no tailpipe emissions, reducing local air pollution. They can also be powered by renewable energy, making them a more sustainable long-term option. Therefore, the government has shifted its policy to encourage the use of electric cars to address these externalities.
UK's Shift in Policy: The UK government once incentivised the purchase of diesel cars to reduce CO2 emissions. However, with increasing awareness of the detrimental health and environmental impact of diesel cars, the government shifted its stance, aiming to ban the sale of new petrol and diesel cars by 2030.
Germany's Diesel to Electric Switch: Germany, the home of major car manufacturers like Volkswagen and BMW, previously promoted diesel cars. But recent emissions scandals and a growing awareness of diesel's environmental impact have led to a significant policy change. The government now offers substantial subsidies and incentives for electric vehicles.
The term that can describe the scenario when a government changes its policy from encouraging the use of diesel cars to promoting electric cars is a "policy reversal" or a "shift in policy paradigm". This is typically done in response to updated information about the environmental and health impacts of diesel versus electric vehicles. Real-world examples include the UK and Germany, where substantial policy changes have been implemented to shift from diesel to electric vehicles in light of the environmental implications.
