UK must accelerate transition to zero emission vehicles

11th September 2018

Coinciding with the global Zero Emission Vehicles Summit held in Birmingham today, the Aldersgate Group launches a new briefing, Driving ambition: accelerating the transition to zero emission vehicles, [1] setting out key business recommendations for rapidly cutting road transport emissions in the UK. The Group argues that to significantly cut emissions in line with climate targets and put the UK at the forefront of the zero emission vehicle industry, government must provide much greater clarity on regulations, fiscal incentives and innovation support to drive manufacturing and demand.

Transport is now the largest-emitting sector of the UK economy, accounting for 28% of UK greenhouse gas emissions in 2017, with road transport the most significant form of emissions within the sector. Hitting the UK’s current climate targets requires the transport sector to cut emissions by 46% by 2030. [2] While the need to decarbonise is urgent, the opportunities of doing so for the UK are also great. The global market for low emission vehicles could be worth £1-2tn per year by 2030, and £3.6-7.6tn per year by 2050 [3] and significantly cutting emissions from road transport would deliver air quality and health benefits. The UK is well placed to capture a significant part of this low emission vehicle global market, with just one Nissan plant in Sunderland producing a fifth of all electric vehicles sold in Europe in 2016. [4]

To seize this economic and environmental opportunity, the Aldersgate Group urges the government to:

1. Drive consumer uptake of the cleanest vehicles by extending the plug-in car and van grants until such a time that electric vehicles reach cost parity with conventional cars, which is not expected to happen until the mid-2020s. [5] The government should also consider boosting demand further through fiscal incentives, including significant VAT cuts on the sale of zero emission vehicles.  
2. Provide much greater clarity on how vehicle emissions are to reduce in the 2020s after the UK leaves the EU. This should include providing clarity on whether the UK will remain part of the current EU rules on car, van and HGV emission targets or whether the UK will develop its own framework to drive down emissions. The government will also need to consider regulatory measures to tackle the limited supply of zero emission vehicles on the market, such as by introducing mandatory zero emission vehicles sales targets as a backstop.
3. Deliver an affordable, efficient and reliable charging infrastructure by accelerating roll out of charging infrastructure to support 100% electric new car and van sales by 2030 and introducing standards on smart charging. Public funding to support charging infrastructure should be targeted where the market will not deliver such as in rural areas and should include offering guarantees against the unknown cost of connecting the chargers to the electricity grid to lower investment risk.
4. Plan now for the future by looking at how the overall efficiency of the transport system can be improved. This should include planning long-term improvements to the accessibility, affordability and reliability of public transport (including working with cities and local authorities), encouraging a shift from road freight to rail, preparing for connected and autonomous vehicles, as well as facilitating disruptor businesses such as car sharing services. This will also require developing a sustainable future road tax system.

Nick Molho, Executive Director of the Aldersgate Group said: “Significantly cutting emissions from road transport is both an urgent environmental imperative and a unique economic opportunity for the UK. We will only get there however if the government provides much greater clarity on how vehicle emissions need to reduce in the 2020s, provides stable grant and tax incentives to drive consumer demand and stands ready to take the necessary measures to ensure that manufacturers play their part in meeting the public and business demand for clean vehicles.”  
 
“If we are to fully decarbonise transport by 2050, technological changes are only part of the picture. The government also needs to plan ahead and consider the shifts in travel patterns and infrastructure needs that are required to improve the overall efficiency of the transport system, from passenger travel to freight transport.”

—ENDS—
 
The Aldersgate Group will be exploring some of wider issues involved in decarbonising the transport sector in a comprehensive report early next year. This will include planning long-term improvements to the accessibility, affordability and reliability of public transport (including working with cities and local authorities), encouraging a shift from road freight to rail, preparing for connected and autonomous vehicles, as well as facilitating disruptor businesses such as car sharing services.

[1] The briefing can be found here.
 
[2] Committee on Climate Change Progress report to Parliament 2018: https://www.theccc.org.uk/wp-content/uploads/2018/06/CCC-2018-Progress-Report-to-Parliament.pdf
 
[3] Road to Zero (2018): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/724391/road-to-zero.pdf
 
[4] Green Alliance: How the UK can lead the electric vehicle revolution (2018)
https://www.green-alliance.org.uk/How_the_UK_can_lead_the_electric_vehicle_revolution.php
 
[5] Bloomberg New Economic Forecast: Electric Vehicle Outlook 2018
https://about.bnef.com/electric-vehicle-outlook/