HomeAir pollutionPhasing out cars with engines: without breaking the bank

Phasing out cars with engines: without breaking the bank

This post is by Greg Archer, UK director of Transport & Environment

The announcement of when the UK should phase out the sale of new cars with engines is imminent and provoking fierce debate. Back in February, the government proposed that sales of new cars and vans with engines should end within 15 years at the latest. The maths was simple: to achieve net zero emissions by 2050, all vehicles with engines need to be off the road by then so the last new car with an engine should be sold by the early 2030s.

The Committee on Climate Change has proposed a 2032 phase out date and most UK environmental groups support 2030. Off the record briefings suggest the government is keen to ban sales of new cars with engines before 2035 but may wait longer before ending sales of new diesel vans. There is also considerable pressure from some car makers for plug-in hybrid electric vehicles (PHEV) cars to be exempted from the ban. However, a number of recent studies show the average emissions of PHEVs are little better on the road than other hybrid cars.

Some car makers claim there is no demand for battery electric cars but, in practice, many have long waiting lists for electric cars and vans. The car rental and leasing industry recently raised the number of electric cars and vans it expected to buy by 2025 to 400,000. The EV100 coalition of businesses has committed to buying nearly five million battery electric cars (globally).

Some car makers are lagging behind
Car makers are divided: the car industry association (SMMT) and Jaguar LandRover (JLR) offer some of the strongest opposition, and Honda recently expressed its opposition on Conservative Home. However, Renault and Nissan are much more supportive. As founding members of Electromobility UK (which was established to help stimulate and steer the shift to battery electric vehicles), they said, “We support the government’s intention to end the sale of all cars with engines by 2035 and earlier if possible, as well as the decision to restrict sales to zero emission models only.”

In contrast, JLR have been vociferous in opposing the internal combustion engine (ICE) phase out. Recent analysis from Transport & Environment shows the company is a laggard in the race to lower car CO2 emissions and has informed investors it expects to be fined £90 million this year for failing to sufficiently lower the CO2 emissions. JLR should be cruising towards its target, which is much easier than other companies’ targets (because of a special dispensation negotiated by the UK government). But the more relaxed goal has meant that, rather than investing in electric vehicles, JLR has focused too much on diesel, with disastrous consequences.

JLR’s cars are inefficient compared to their competitors and they are falling behind in selling electric vehicles (EVs). In the first half of 2020, new cars sold by JLR still averaged 160g CO2/km whereas Volvo, Mercedes and BMW have emissions in the range 118 – 129g CO2/km. This year, JLR new car CO2 emissions have increased whereas Volvo has cut its by nine per cent. Whereas nearly ten per cent of cars sold by JLR in the first half of 2020 were electric; Volvo has sold a massive 23 per cent (all PHEVs); and BMW nearly 13 per cent. To avoid fines JLR needs to sell about 15 per cent EVs in 2020 and 18 per cent in 2021.

Particularly worrying for the UK is that most UK car makers are only planning modest increases in future battery electric vehicle production. At present, JLR does not manufacture any battery electric cars in the UK and only plans for one in seven cars made in the UK not to have an engine by 2027. This is in contrast to more than one in three Minis manufactured in Oxford. Toyota and Vauxhall currently don’t plan any battery electric vehicle production in the UK. The best way to stimulate new EV production in the UK will be to create the biggest market for EVs in Europe and an early phase-out date is the best way to do this.

The government needs to act smart to avoid bankrolling the transition
Arguably more important than the phase-out date is a clear commitment from the government that it will legislate to ensure the goal is delivered and does not become yet another green aspiration. Transport emissions are threatening to derail meeting the fifth carbon budget (for the period 2028-32). Analysis by Green Alliance shows a 2030 phase-out date could get the UK back on track and deliver a third of the additional emissions cuts needed between 2028 and 2032. With the Department for Transport promising to publish its Decarbonisation of Transport Plan this year there is an urgent need to finalise a credible package of legislation and incentives to deliver the phase-out goal. But with public spending rising as a result of the Covid-19 pandemic, there is little spare cash to accelerate the transition.

To avoid bankrolling the transition, the government will need to act smart. Regulating car makers to require them to progressively increase the share of zero emission vehicles sold each year is essential to guarantee increased supply, along with effective penalties so targets are met. To help sell EVs, car registration taxes should be reformed to raise taxes on gas guzzlers to fund grants on electric cars, as France has successfully pioneered. There is presently one public charge point in the UK for every four battery electric cars on the road, which is more than sufficient but, as the number of cars grows, so must the network. Charger coverage across the UK is currently patchy, the reliability of some of the charging networks is poor and for EV drivers charging needs to be made much easier. Primary legislation to tackle these challenges is available and should be used.

The race is now on to build the cars of the future. In 2018, the UK built a quarter of the battery electric cars in Europe but, by 2025, this will have slumped to around six per cent. An early date to end sales of new cars and vans with engines is essential and can be delivered through regulation and tax reform to encourage investment here. The UK can be a leader in this key green growth opportunity and the government shouldn’t bend to the threats of a few car makers. Moving decisively is the best way to encourage investment in the UK and ensure the UK car industry is fit for the future.

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Green Alliance is a charity and independent think tank focused on ambitious leadership and increased political support for environmental solutions in the UK. This blog provides space for commentary and analysis around environmental politics and policy issues as they affect the UK. The views of external contributors do not necessarily represent those of Green Alliance.