By Jamie Maynard (BSc Economics)
[This essay was written for the Government, Welfare and Policy third-year undergraduate module. Students were tasked with writing a blog-style essay on a topic linked to a group poster project. Topics were chosen by students and reflect their own interests. The essay gave them experience of writing content in an engaging style for a non-expert audience. What you see below is one of this year’s top-marked blog-style essays. Christa Brunnschweiler]
Behind the joys of February heatwaves and hotter summer days lies a fundamental truth that governments across the world are only now finally starting to wake up to – that we’re on the brink of climate catastrophe. For years environmental sustainability has taken the backseat in terms of macroeconomic priorities and only now are governments beginning to realise the severity of this mistake. Since the years of the industrial revolution we’ve been continuing to warm the planet far too quickly, whilst adding CO2 to the atmosphere faster than any other time in our history. This can no longer continue. After years without a credible plan Boris Johnson announced the UK governments ‘Ten Point Plan for a Green Industrial Revolution’ in November 2020, which covers:
- Offshore wind
- Hydrogen
- Nuclear
- Electric Vehicles
- Public Transport, Cycling & Walking
- Jet Zero & Greener Maritime
- Homes & Public Buildings
- Carbon Capture
- Nature
- Innovation & Finance
As seen in Table 1, pre-pandemic data shows that transport is the biggest emitter of carbon dioxide emissions in the UK, amounting to 34% in 2019, with the majority of these transport emissions originating from road transport. Consequently, the focus of this blog will be on point four of the plan which focuses on accelerating the shift towards zero-emission vehicles.
2030 Petrol and Diesel Ban:
The headline and target from Point Four of the government’s plan is to “end the sale of new petrol and diesel cars and vans by 2030” (HM Government, 2020: 14), 10 years earlier than originally planned, “with all vehicles being required to have a significant zero emissions capability (e.g. plug-in and full hybrids) from 2030 and be 100% zero emissions from 2035”. This target is much welcomed considering that the Climate Change Committee advise that 2030 should be the desired date for the end of fossil fuel-powered vehicles, with 2032 being the very latest. Although, the committee further suggests that the ban should be accompanied by an increasing mandate for car manufacturers to sell zero-emission vehicles by 2030, however, the plan allows for hybrids to be sold until 2035. In contrast, a report published by New Automotive says that a 2030 ban would cut emissions from 68MtCO2e (metric tonnes of carbon dioxide equivalent) to 46MtCO2e, still well above the 33MtCO2e target implied by the UK’s legally binding carbon reduction targets. Despite this, 2030 is an ambitious target, placing the United Kingdom as one of the leading nations in banning the sale of new electric vehicles. Whether consumers and producers will be prepared for this ban or not is another thing, with the extent of the issue highlighted in Table 2, which shows how far behind alternative fuelled car sales have been behind petrol and diesel cars.
Whether consumers and producers are prepared, or not, will be assessed in the next few sections as we analyse the supporting measures that have been put forward by the government to incentivise the purchase of alternative fuelled – electric – vehicles.
Charging Problems:
To be able to make the switch to electric vehicles, consumers will need wide access to charging stations, not just when travelling, but also when at home. However, given that at least one in three households relies on street parking (SMMT, 2021: 5), there must be a huge commitment to expanding on-street charging stations. In terms of the number of charging stations needed by 2030, estimates vary significantly. According to the think tank Policy Exchange, the UK will need 400,000 public charging points. Given that on average 7,000 charge points are installed in the UK per year, this rate will need to increase by five times to 35,000 to hit the 400,000 target by 2030 (Birkett & Nicolle, 2021: 37). In comparison, the Society of Motor Manufacturers and Traders suggest that 2,743,000 charging points are required by 2030 (SMMT, 2021: 5), which would require 255,500 charging points being installed in the UK per year, costing £17.6 billion (including private investment). Given such staggeringly different estimates, it becomes very difficult to assess whether the £1.3 billion investment “to accelerate the roll out of charging infrastructure, targeting support on rapid charge points on motorways and major roads” set out in the governments’ Ten Point Plan will be sufficient enough in supporting the transition to electric vehicles. Ultimately, the success of the charging point roll out will depend upon the speed of both the government and private firms roll out of charging points, and the accessibility of these charging points, ensuring that rural towns and communities are not left behind.
Consumer Pricing Issues:
Despite the gradual rise in sales of electric vehicles in recent years, electric vehicles are not cheap to make, with 30-45% of the total cost of production swallowed up by the car’s battery (SMMT, 2021: 4). Electric vehicles have the advantage of having lower running costs compared to petrol and diesel vehicles, however, as of 2021, this is not yet enough to offset the high initial purchase cost. Therefore, they largely rely on incentives to be sold. If the United Kingdom is to reach the 2030 target, then these incentives will need to increase to further increase demand and encourage the transition to electric vehicles. In response, the government is to provide £582 million in grants for the purchase of electric vehicles, making them cheaper to purchase and to encourage more individuals to make the switch, as part of the plan. This is a welcomed cash injection that complements the existing plug-in car grant that was introduced 10 years ago (GOV.UK. 2021), with both policies aiming to accelerate the demand for electric vehicles. It, however, remains unclear whether this will be enough to stimulate the required demand to ensure vehicle availability at all market segments. Meeting the 2030 target will, therefore, also depend on whether private investment and innovation from manufactures can bring down production costs, and therefore consumer price too.
Supply Chain Issues:
A further obstacle that needs to be overcome to reach the 2030 petrol and diesel ban is supply chain issues. From January 1st, 2024, batteries will only be allowed to contain 50% of materials from outside the UK or EU to avoid EU tariffs (Jolly, 2021), due to Brexit. Realistically UK therefore needs to source battery materials from within the UK or EU. This would also have the added benefits of ensuring reliability within the supply chain and ensuring automotive employment within the UK. However, the majority of batteries used in UK and EU electric vehicles are currently sourced from east Asian countries. Consequently, the UK need to develop their own gigafactories (battery factories) to bring down costs enough to ensure that electric vehicle sales increase. In response, the government has pledged £500 million of investment as part of the Ten Point Plan which looks set to be used to fund a second gigafactory in the UK. However, there appears to be no clear plan regarding how this money will specifically be allocated. Subsequently, it’s important the government outline how this funding will be allocated as soon as possible in order to provide clarity and certainty to private manufacturers so they can begin construction of gigafactories, thus, to ensure the costs of electric vehicles are brought down, in turn resulting in more electric vehicles on UK roads as they become more affordable, as to ensure the 2030 ban is met.
Final Remarks:
To meet the 2030 diesel and petrol ban a monumental effort is needed by the car industry to ensure the country is ready for the inevitable shift to electric vehicles. The goal enables manufacturers to target a set date which in turn should speed up the reduction in UK fossil fuel consumption. Charging infrastructure must increase dramatically so that the uptake of electric vehicles is practical and accessible for everyone in the country. Manufacturers, with the help of the government, must ensure the price of electric vehicles are affordable to consumers of all incomes so that the uptake of electric vehicles is high enough to meet the 2030 target. And gigafactories must be developed so that the infrastructure is in place to support manufacturers during the production process of electric vehicles.
The spending commitments in the Governments plan do address these issues, however, it remains unclear as to whether those spending commitments are enough to prepare the UK, thus, a more thorough strategy is needed. For example, in terms of charging points, it is not clear how many are needed, and we also do not know exactly how the £500 million for gigafactories is going to be spent. These are issues that should be addressed in the publication of the Delivery Plan which is set to published sometime in 2021.
Bibliography:
Birkett, E. and Nicolle, W., 2021. Charging Up: Policies to deliver a comprehensive network of public EV chargepoints. [online] Policy Exchange. Available at: <https://policyexchange.org.uk/wp-content/uploads/Charging-Up.pdf> [Accessed 16 April 2021].
Committee on Climate Change, 2020. Reducing UK emissions Progress Report to Parliament. [online] London. Available at: <https://www.theccc.org.uk/wp-content/uploads/2020/06/Reducing-UK-emissions-Progress-Report-to-Parliament-Committee-on-Cli.._-002-1.pdf> [Accessed 15 April 2021].
Department for Transport, 2020. Vehicle Licensing Statistics: 2020 Quarter 2 (Apr – Jun). [online] Available at: <https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/917501/vehicle-licensing-statistics-april-to-june-2020.pdf> [Accessed 15 April 2021].
GOV.UK. 2021. Plug-in car, van and truck grant to be targeted at more affordable models to allow more people to make the switch. [online] Available at: <https://www.gov.uk/government/news/plug-in-car-van-and-truck-grant-to-be-targeted-at-more-affordable-models-to-allow-more-people-to-make-the-switch#:~:text=The%20plug%2Din%20car%20grant,of%20more%20than%20285%2C000%20vehicles.> [Accessed 18 April 2021].
HM Government, 2020. The Ten Point Plan for a Green Industrial Revolution. [online] Available at: <https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/936567/10_POINT_PLAN_BOOKLET.pdf> [Accessed 19 April 2021].
Jolly, J., 2021. UK carmakers have three years to source local electric car batteries. [online] the Guardian. Available at: <https://www.theguardian.com/politics/2021/jan/03/uk-carmakers-have-three-years-to-source-local-electric-car-batteries> [Accessed 22 April 2021].
New Automotive, 2020. The Missing Metric. p.16.
Smalldridge, G., 2020. 2019 UK greenhouse gas emissions, provisional figures. [online] Assets.publishing.service.gov.uk. Available at: <https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/875485/2019_UK_greenhouse_gas_emissions_provisional_figures_statistical_release.pdf> [Accessed 14 April 2021].
SMMT, 2021. Delivering the Triple Bottom Line: A Blueprint for the Electric Vehicle Revolution. [online] Available at: <https://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-Electrified-blueprint-FINAL.pdf> [Accessed 16 April 2021].
Banner Photo by CHUTTERSNAP on Unsplash
Electric will win, of course! Thank you 😊