From 11% to 100% zero emission cars in 14 years: Government lacks plan for “huge challenge” of social and economic transition

In a report published today the Public Accounts Committee says Government has set ambitious targets to phase out new petrol and diesel cars by 2030 and for all new cars to be zero-emission from 2035, but with just 11% of new car registrations for ultra-low emission cars in 2020 it will be a “huge challenge” to get this to 100% in the next 14 years.

Achieving this ambition will require convincing consumers of the affordability and practicality of zero-emission cars, with up-front prices still too high for many in comparison to petrol or diesel equivalents, and addressing the current very uneven take-up across the UK.

The number of charging points is increasing rapidly, but many more will be required within a very short period of time to support the envisaged growth in electric cars in the UK, and the PAC is not convinced the government is on track with this crucial infrastructure.

Echoing its recent report on environmental taxes, which said the Treasury and HMRC seemed “stuck in a bygone era”, with a narrow focus on tax revenues rather than the way they must be used to drive the transition to net zero, the Committee says DfT and BEIS will need to do much more to consider the practical application of this large societal change, and put consumers at the heart of it.

The Departments will need to be on top of the other consequences arising from this transition, including the impact on the skills and capabilities required to support the changeover in the UK vehicle fleet; the environmental and social implications of the switch-over both in the UK and across global supply chains; the impact on our future power needs; and the impact on the government tax-take due to the loss of fuel duties.

To date the Departments have no clear published plan setting out how they propose to manage these consequential impacts, who they will need to work with, and the timetables for any action. The onus is on the Departments to show they are on top of all the repercussions and focussed on supporting consumers to shift to electric as they work towards the government’s ambitious goal.

Meg Hillier MP, Chair of the Committee, said: “The Government has a mountain to climb to get to all new cars in the UK emitting zero carbon in the next 14 years: to convince consumers and make the cars appealing, to make the car industry environmentally and socially compliant, to build the necessary infrastructure to support this radical shift and possibly biggest of all, to wean itself off carbon revenues. Yet once again what we’ve got is a Government throwing up a few signs around base camp - and no let-up in demand for oversized, petrol- guzzling vehicles.

“This isn’t about more targets with no plan behind them inevitably getting missed - it’s about averting the real-world challenges that are bearing down on all of us. The Government needs to get the country behind it and lead the way in the global race against climate change.”

PAC report conclusions and recommendations:

1. The Departments for Transport and for Business, Energy & Industrial Strategy have not yet published a clear plan for delivering the Government’s ambition for the expansion of zero-emission cars. Government has announced that by 2030, the sale of new petrol and diesel cars will be phased out, and from 2035, all new cars will be zero-emission at the tailpipe. Progress has been made in increasing uptake, with the Department for Transport estimating that just under 11% of new car registrations in 2020 were ultra-low emission, up from 3% in 2019. The Department sees 2020 as having been a breakthrough year, however, there is only a short amount of time for government to meet its full ambitions for zero-emission cars. The Ten Point Plan for a Green Industrial Revolution commits to publishing a delivery plan in 2021, but this has not yet been released.

Recommendation: Departments for Transport and for Business, Energy & Industrial Strategy should set out their plans for managing the complex transition to electric cars and ensure that progress can be monitored against it. They should then regularly report on progress being made towards the 2030 target to phase out new petrol and diesel cars and the associated impact on reducing carbon emissions. As well as tracking the take-up of these vehicles, the Departments should regularly report progress against a range of metrics covering, for example:

• the relative affordability of zero-emission vehicles compared to their petrol or diesel equivalents (comparing upfront costs and then running costs);

• the sales of ultra-low emission vehicles in the second-hand car market as a proportion of overall second-hand sales;
• the accessibility of charging infrastructure in each region/local authority area; and,
• the overall impact on carbon emissions from the UK car fleet.

1. There are a wide range of consumer-facing issues that still need to be addressed to increase the uptake of zero-emission cars. Consumers are not all yet convinced that zero-emission cars are a suitable alternative to petrol and diesel models, with concerns over the affordability of these vehicles, the distance they can travel on a single charge and the availability and accessibility of charge-points when and where required. The Department for Transport claims that the price gap between ultra-low emission and petrol and diesel cars is rapidly closing and highlights that the running cost of an electric car is lower than that of a petrol or diesel equivalent. However, we are not persuaded that the upfront costs are low enough for many, particularly if, as the Department states, only 13 electric car models cost less than £30,000. There are also other price differentials that need to be addressed, such as the big difference in the cost of charging on the public network compared to charging on a driveway at home and the costs of replacing electric car batteries. The Departments have deliberately sought to make interventions on a UK-wide basis, but take-up has been greatest where there are high levels of traffic, charge-points and affluence. There is a risk that some regions get left behind during this transition, including those in rural areas.

Recommendation: The Departments for Transport and for Business, Energy & Industrial Strategy need to have a sufficient understanding of how changes to the vehicle market are impacting, and going to impact, different types of consumers in different parts of the country. Their plan for expanding the number of zero-emission cars on our roads needs to clearly set out how they propose to tackle emerging consumer issues.

1. We are not convinced that government has sufficiently thought through how the charging infrastructure will expand at the pace required to meet the ambitious timetable to phase out petrol and diesel vehicles. The Department for Transport makes a series of assumptions about the types of journeys people make and how they charge their electric car: 99% of all journeys are under 100 miles, the vast majority of electric car charging takes place at home during the night, and people will use public charging infrastructure for the long journeys they take. It has not however made an estimate for how many charge-points the country will need to keep up with the increase in electric cars. The Department regards government’s role for developing the charging infrastructure as stimulating rapid private investment and unblocking market failures. Whilst it has committed to targeting six rapid charge-points at every motorway service station by 2023, and up to 10 to 12 at larger sites, it has not focused much attention on charging for people that do not have off-street parking.

Recommendation: The Department for Transport should set out as part of its plan for increasing the use of electric cars, how it intends to address the remaining barriers to expanding the charging network, for example, the availability of chargers where drivers do not have off-street parking.

1. The Departments have not yet demonstrated how they are going to encourage industry to maintain proper environmental and social standards throughout their supply and recycling chains as the zero-emission car market grows. There are a range of environmental impacts and costs affecting the growth of zero-emission cars, including the materials used to make a car and the stability of the associated supply chains, the carbon impact from where a car is manufactured, the emissions and the eventual recycling challenge. The Department for Transport says it has analysed the results of studies examining the lifecycle emissions of electric cars and found that they are about 30% to 40% lower than cars using an internal combustion engine. The Department tells us that manufacturers are focusing on the environmental and social consequences of making electric cars. The Department reports that manufacturers are looking for ways to develop batteries without rare materials and that it is in their business interests not to source products from areas with unreliable or unethical supply chains. As the number of electric cars being produced increases, pressures on the supply of rare materials may increase, and we are concerned that environmental standards could slip.

Recommendation: The Departments for Transport and for Business, Energy & Industrial Strategy should set out their approach to encouraging car manufacturers to maintain proper environmental and social standards throughout their supply and recycling chains as zero-emission cars volumes grow. This includes as examples:

• publishing information on lifecycle emissions;

• details of relevant reporting standards for manufacturers on environmental and social stewardship; and,
• future plans to develop the reporting standards.

1. There are other issues to be addressed in the transition to zero-emission cars, such as the need to train and retrain the workforce required to service the new car fleet, the impact on the demand for power, and the tax implications from phasing out new petrol and diesel cars.There are numerous uncertainties that the responsible Departments must overcome as petrol and diesel cars are phased out. The skilled workforce for maintaining zero-emission cars will need to grow as many people move away from petrol and diesel engines. The Department for Business, Energy & Industrial Strategy estimates that electricity demand will double by 2050 as a result of many different elements, of which one contributor is electric vehicles. Investments will also be needed in the transmission and distribution networks to ensure they are upgraded to cope with demand from electric vehicles and other demand sources. The Department estimates this will translate to a 2% increase in energy bills by 2030. There are significant issues that government will need to consider as part of the transition, for example the lost taxes from petrol and diesel sales, the impact on insurance regulations about charging vehicles indoors, and how other types of vehicles will be decarbonised.

Recommendation: The Departments for Transport and for Business, Energy & Industrial Strategy need to work with other departments to consider the practical implications of the transition to zero-emission cars. They should set out in their plan how they are going to manage the wider societal impacts of phasing out new diesel and petrol cars, for example, retraining the UK workforce, the impact on power generation and transmission, and implications for the UK tax take./ENDS

Notes to editors:

1. ‘The average carbon dioxide emissions of cars sold in the UK rose for the third year in a row during 2019 as falling diesel sales and the rising popularity of SUVs dealt a blow to Britain’s hopes of reaching climate targets.’

https://www.theguardian.com/business/2020/jan/06/uk-car-sales-brexit-diesel-electric-vehicles-emissions

1. Inquiry details including link to underlying NAO report: https://committees.parliament.uk/work/1008/low-emission-cars/