Polluting diesel lorries risk driving up UK inflation – phasing them out is a no-brainer

This article was originally published in BusinessGreen.

The end of the road for polluting diesel lorries is finally in sight. A long awaited government consultation is considering how the UK could drive truck makers to phase out the sale of lighter diesel heavy good vehicles (HGVs) by 2035 and the biggest lorries by 2040. These new regulations, due to be announced in the autumn, will be good for public health and the climate, and they will also help to make the economy more resilient to future inflationary oil shocks.

Lorries make up only 1.5 per cent of vehicles on our roads but are responsible for an outsized share of road traffic pollution. Major arterial roads crossing our towns and cities typically carry more freight, disproportionately exposing urban communities to higher levels of harmful nitrogen oxides (NOx) and particulate matter pollution (PM) which are linked to a range of health problems, including strokes, asthma, cardiovascular disease and dementia. Phasing out the sale of diesel HGVs is going to be a big win for the health of these communities.

It’s good news for the climate too as road transport is the UK’s single biggest source of greenhouse gases. It would be much harder to meet crucial targets to slow down the damaging impacts of climate change without these proposed new regulations.

It makes economic sense
The oil shock that has followed the Gulf conflict shows that there is also an economic imperative to switch to electric transport. Opponents of the new regulations have claimed that the upfront costs of switching to zero emission trucks and investing in charging infrastructure at depots could be inflationary. But new analysis from Green Alliance shows this will not be the case at all and the impact would be minimal.

Electric lorries are expected to reach cost parity with diesel HGVs by the early 2030s. That means annual targets to progressively increase sales of zero emission HGVs from the late 2020s onwards would have a negligible inflationary impact over the next few years. And, over the long term, the regulations will actually cut costs. The analysis estimates that the zero emission regulation will reduce the costs of transporting road freight by seven per cent between 2027 and 2040, as the rules gradually take effect.

If we continue to rely on fossil fuels for transporting goods by HGV, it is likely to be more inflationary. We are in the midst of the second inflationary fossil fuel price shock in four years. The last one did enormous damage to living standards, businesses and the public finances. And the risks of the same again are very high in this new crisis.

UK diesel prices rose by 47p a litre, between the last week of February and the first week of May 2026. Green Alliance’s analysis estimates that diesel price shocks like this could drive the cost of HGV freight up by as much as much as 13 per cent in a single year. By contrast, the largest overall annual inflationary impact of a zero emission HGV mandate on prices paid by consumers is expected to be just 0.0023 per cent in 2030.

That is 10 times smaller than a scenario where diesel prices return to normal quickly and rise slowly for the next few years. And more than 50 times smaller than a more realistic scenario where diesel prices where prices return to a level slightly above the pre-crisis average, and rise at a moderate pace after that. In a scenario where we experience another geopolitical shock in the next seven years the inflationary impact of continued reliance on diesel fuelled HGV deliveries could be more than 70 times more inflationary.

For many city, urban and regional delivery routes, where vehicles can return to depots, battery electric trucks already provide a viable alternative to diesel HGVs. The government should introduce a mandate on manufacturers to progressively increase sales of zero emissions HGVs to meet the 2035 and 2040 phase out dates for sales of polluting diesel lorries, under and above 26 tonnes.

To prevent the upfront investment costs and the need for new depot charging infrastructure slowing down the changes, the government should support businesses with continued capital support to buy the kit and make the switch.

The only conclusion is that UK reliance on diesel to fuel HGVs leaves our economy, hauliers and businesses exposed to unpredictable and damaging inflationary pressures from oil shocks. The new zero emission HGV mandate being considered by the government will have a negligible impact on inflation between now and 2040 and comes with a big public health and climate protection bonus.