Since 2008, the environmental bonus-malus scheme has been one of the main incentive mechanisms used in France to decarbonise the market for new passenger cars. However, its apparent simplicity – subsidising the lowest-emission vehicles and taxing the most polluting ones – masks some difficult issues. Its environmental effectiveness depends on the extent to which it actually encourages a shift towards lower-emission vehicles: the subsidy partly benefits buyers who would have opted for an electric vehicle in any case, and the scheme’s spillover effects on energy taxation increase the net cost to the public purse beyond the stated expenditure. Furthermore, its redistributive effects cannot be directly deduced from the amounts paid out or levied: they depend on the purchasing behaviour that the bonus and penalty schemes do or do not influence. Here, we quantify these various effects using a vehicle demand model estimated on the basis of an exhaustive matching of 2022 and 2023 vehicle registrations with household tax and demographic data.
The eco-bonus-malus scheme: how effective is it, and how fair?
This chapter presents a multidimensional analysis, beginning by setting out the analytical framework and the specific features of environmental policies, such as the bonus-malus scheme. It then describes two stylised facts concerning the scheme’s targeting and employs a vehicle demand model to quantify the behavioural effects associated with the bonus and penalty, in order to deduce their environmental and welfare impacts.
Reference Budget Outlook – June 2026 – Chapter 4
Presentation
Key Results
- There is a very marked income gradient in vehicle purchases, with wealthier households accounting for a large proportion of new car purchases.
- Taking behavioural responses into account and valuing carbon at the cost of climate action, the penalty appears to be more effective than the incentive in reducing CO₂ emissions per kilometre from new vehicle fleets.
- The incentive is subject to a significant windfall effect: around 80 per cent of electric vehicle buyers would have purchased one even without the subsidy. Public expenditure therefore largely amounts to a transfer to households that had already made up their minds, rather than acting as a behavioural lever.
- At a given standard of living, the effects of the bonus-penalty scheme vary greatly, depending on the characteristics and preferences — or purchasing profiles — of households. The wealthiest households are thus those that buy the most electric vehicles, those that buy the vehicles subject to the highest penalties, and those that are least sensitive to price fluctuations caused by the bonus-malus scheme.
- The bonus and penalty schemes do indeed alter behaviour at the lower and middle ends of the income distribution, whilst the volumes – and therefore the direct transfers – are concentrated at the top. This tension between targeting and marginal efficiency argues in favour of support explicitly targeted at low-income households.
