We chose to examine why the environmental car premium was introduced and what the disadvantages and advantages it has, furthermore if the goals of the premium were achieved, and why the environmental car premium was discontinued. In addition, we examined the actions that will be taken to replace the environmental car premium. Besides this, we tried to get answers to what actions the government has planned to perform to be able to achieve the national objectives in terms of reduction of the carbon dioxide. The case study is based on six qualitative in-depth interviews of stakeholders from both government agencies and associations, the Environmental Protection Agency, Nature Conservation, Green Car, Motor Men, Ministry of Environment and Transport Board. From our study we found that the environmental car premium was introduced to stimulate the use of fuel efficient cars, environmental cars, and increase the proportion of environmental cars in new sales. The primary disadvantages of the premium are that it only applies to individuals and also provides the opportunity for motorists to fill up non-environmentally friendly fuel. The apparent benefits of the environmental car premium is that it gives a definite answer to what a environmental car is, and it has encouraged the public to both involved and rewarded. There are two reasons why the premium was discontinued prematurely: that it was too expensive and that the government considers that they have achieved their objectives with the introduction of the premium. The environmental car premium will be replaced with a five-year tax exemption for environmental cars. The main management control which the government uses to reduce carbon dioxide emissions are carbon dioxide taxes and emissions trading. Finally, we believe that the environmental car premium is an environmentally good measure, but not economically defendable.