House of Commons - Environmental Audit

Select Committee on Environmental Audit Minutes of Evidence

Memorandum submitted by the Society of Motor Manufacturers and Traders Ltd (SMMT)

The Society of Motor Manufacturers and Traders (SMMT) is the leading trade association for the UK automotive industry. SMMT provides expert advice and information to members as well as to external organisations. It represents some 600 member companies ranging from vehicle manufacturers, component and material suppliers to power train providers and design engineers. The motor industry is an important sector of the UK economy. It generates a manufacturing turnover approaching £45 billion and supports around 850,000 jobs.

SMMT welcomes the opportunity to contribute to the EAC inquiry on carbon emissions from transport. SMMT has had a long and successful relationship with the Department for Transport and is closely involved in ongoing discussions about reducing the environmental impact of the UK road transport. SMMT has submitted a response in December 2005 to the Eddington Review on the long-term impact of transport decisions on the UK economy and in March 2005 responded to the UK Government's Climate Change Review Programme. SMMT also publishes, on behalf of the industry, an annual CO₂ report, which has shown a 9.7% reduction in CO₂ from new cars registered in the UK between 1997 and 2004.

The following comments focus on carbon emissions from road transport.

1. EXECUTIVE SUMMARY

1.1 SMMT and our members in the UK automotive industry, fully support the move to reduce the environmental impact of transport.

1.2 The automotive industry (represented by ACEA in Europe and JAMA and KAMA for Japan and Korea respectively) has committed to a voluntary agreement to cut CO₂ emissions from new cars across Europe to 140 grams per kilometre (g/km) by 2008-09, equivalent to a 25% reduction compared with the base year of 1995. This has required heavy investment in R&D and the introduction of increasingly technologically-sophisticated new models. Interim European progress targets have been achieved by ACEA (165 to 170 g/km in 2003). New car emissions in the UK have fallen by 9.7% from 1997 to 2004 to an average of 171.4g/km and further improvements are expected. Discussions are already under way between vehicle manufacturers and the Commission to introduce future improvements beyond 2008-09.

1.3 In 2005 the European CARS 21 High Level Group, on which the UK Government was represented by the Secretary of State for the Environment, established the mandate for an "Integrated Approach" to reducing CO₂ from road transport in the EU[1]. The "Integrated Approach" combines contributions from vehicle manufacturers, oil companies, drivers and member state authorities to reduce car CO₂ cost-effectively through synergies between coordinated measures by all key stakeholders. The European Climate Change Programme 2 is currently evaluating how the Integrated Approach can be applied to achieve the EU's ambition level of equivalent 120g/km average new car CO₂ by 2012—not only through vehicle technology, but also through alternative fuels, driver behaviour and infrastructure management measures. Against this background, the DfT and Government should recognise that a focus on vehicle technology alone is insufficient to achieving its ambitious targets for CO₂ reductions in road transport. SMMT advocates the "Integrated Approach" at EU and UK level to achieve cost-effective reductions in CO₂ emissions from road transport as endorsed by the CARS 21 final report and encourages Government to engage with the key stakeholders as illustrated in the SMMT 6th Annual Sustainability Report (see Annexes).

1.4 The Government's "Powering Future Vehicles" strategy (2002), sets targets for new low carbon vehicle sales by 2012; vehicle technology is specifically targeted to deliver reductions in CO₂ emissions from road transport. SMMT strongly believe that it is essential for the Government to expand and integrate the strategy to reduce CO₂ from road transport by:

— Providing clean, low carbon fuels.

— Addressing the behaviour of the consumer/motorist in the purchase of vehicles and their use.

— Improving road infrastructure design and management.

Smarter Choices

— Giving greater consideration to spatial planning issues.

1.5 The automotive industry recognises the good work by the Department for Transport (DfT) in key policy areas and strategies to support the environment and safety. However, improved communication and synergy within the department and with other Government departments is needed to enhance effectiveness and to understand potential conflicting policy objectives in the pursuit of CO₂ reductions.

2. RESPONSE TO CONSULTATION QUESTIONS

Q1. What progress the DfT is making against key carbon reduction targets or forecast included in the Ten Year Plan (2000), the Climate Change Strategy (2000), the 2004 Transport White Paper, the 2004 PSA, Powering Future Vehicles (2004), and other documents?

2.1 The Government's Energy White Paper (2004) outlined the challenge for road transport to achieve a reduction of 2.4 million tonnes of carbon (MtC) by 2020. Current Government strategies focus on the environmental advances in vehicle technology and on the increased use of biofuels under the Renewable Transport Fuels Obligation (RTFO), which Government expects to deliver a reduction of 1 MtC by 2010.

2.2 Manufacturers in the automotive industry are developing increasingly fuel efficient conventional engines whilst also introducing alternatively-powered low carbon vehicles. All vehicles today can operate on 5% blends of biofuels (biodiesel and bioethanol) which would bring immediate carbon saving benefits from road transport under the current refuelling infrastructure. Under the Renewable Transport Fuels Obligation (RTFO) the UK Government aims to achieve a 5% penetration of biofuels (by volume) in the UK market by 2010. The industry is engaged in technical discussions at European level to enable the future use of higher percentage biofuel blends (10% bioethanol/biodiesel) in new vehicles. Some manufacturers are already bringing to market niche vehicles that can run on higher percentage blends, eg flex fuel vehicles (FFVs) capable of running on up to 85% bioethanol (E85), thereby providing further carbon saving potential.

2.3 The automotive industry has delivered substantial progress in reducing new car CO₂ emissions against a background of competing and often conflicting policy objectives. Measures to improve CO₂ emissions through vehicle technology compete with measures addressing air quality and road safety objectives, eg making vehicle safer yet heavier and less fuel-efficient (safety/CO₂ trade off) or lower in emissions but higher in CO₂ (air quality/CO₂ trade off). The CARS 21 report sets out the key principles for better regulation on vehicle technology going forward. It establishes an integrated approach to CO₂ and road safety objectives as the cost-effective way forward, and presents a 10-year regulatory road map that engages all stakeholders involved in the integrated approach and reduces the cumulative burden and competitive impact of achieving competing regulatory demands on one industry alone. SMMT calls on the UK Government and DfT to work within the framework set out by CARS 21 to achieve its CO₂ and road safety objectives.

2.4 SMMT understands that around 85% of total CO₂ emissions from road vehicles are emitted when the vehicle is being used on the road[2]. In addition to industry action on vehicle technologies and fuels, Government strategies should therefore focus on the end user (individual motorist and organisations). Through the choices they make, motorists play a critical part in achieving Government's key carbon reduction targets:

— Vehicle choice—by choosing a lower emitting new model, motorists can help drive the shift to low carbon road transport. Lower carbon models exist in each vehicle segment. The new colour-coded car label, voluntarily introduced by the industry in September 2005, is designed to help consumers make an informed choice.

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Drive Green, Drive Safely

2.5 SMMT is concerned about discrepancies that exist between DfT's road transport CO₂ projections and modelling by the Department for Trade and Industry (DTI) for the period 2000 to 2010. Government models would benefit from a standard, consistent approach or definition to ensure all stakeholders have a clear understanding of the make up of future emission forecasts. The models need to recognise ongoing vehicle and fuel technology improvements post 2008-09 and integrate a realistic assessment of the contribution that "soft" behavioural measures (eg eco-driving) and effective infrastructure management could play, which SMMT is calling on Government to embrace as part of an Integrated Approach to reducing road transport CO₂.

Q2. Whether the DfT's carbon reduction target is underpinned by a coherent strategy stretching across the department's entire range of activities?

2.6 SMMT recognises the positive elements of the DfT's work contributing towards reducing CO₂ emissions from road transport, but recommends further development and conscious integration of these elements under an Integrated Approach on the following policy issues. Wherever possible, common messages and actions on road safety, air quality and CO₂ should be managed across departmental divisions to bring best value to policy. This requires coordination between key departments to ensure coherent, integrated policies and improved internal communication on the department's targets.

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— Alternative fuels. The development of the RTFO underlines the DfT's objective to promote the introduction and market uptake of clean, low carbon fuels. Crucially for the RTFO to work, certificates under the obligation should be linked to fuel quality standards so that the biofuels satisfy all "fit for purpose" parameters. SMMT urges Government to ensure that biofuels which are incentivised through the UK fuel duty rebate and certificates under the RTFO strictly adhere to existing and future European and UK fuel quality standards. The HMRC definition of biodiesel is inadequate and not based on the full range of "fit for purpose" parameters associated with good quality fuels under existing standards. DfT and HMRC need to coordinate their work to ensure clear long term signals on fuel quality are sent to the market now to support the Government's own biofuels targets.

Safe and Fuel Efficient Drivers

Drive Green, Drive Safely

— Infrastructure management. The management of traffic flows on motorways and major trunk roads by the Highways Agency demonstrates the importance of Government's role in reducing congestion. SMMT would like to see further examples of an effective strategy to manage road transport infrastructure through a combination of good design, traffic management and accident clearance, for example, to ensure consistent, reliable and safe journeys (see Annex 2).

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Tomorrow's Roads—safer for everyone, 2004

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2.7 The above examples areas of policy are diverse, and the DfT must ensure greater synergy between these policies and their implementation to ensure they are complimentary and cost-effective.

Q3. Whether the current balance of expenditure between the DfT's objectives (as revealed in its 2005 departmental report, Annex A) adequately reflects the environmental challenges it faces (see note 3)?

2.8 SMMT believes that better value for money can be achieved at the DfT through improved integration of DfT activities and further synergies between agencies and key policy issues.

2.9 SMMT supports road transport expenditure that provides consistency and stability over the long-term to increase certainty for consumers and business planning and investment. All DfT expenditure supporting road transport CO₂ reduction targets should be technology neutral and include a long term planning element.

2.10 In 2005, the DfT's flagship Transport Energy grant funding programmes for clean vehicles and fuels ceased without succession programmes yet in place, following previous years of "stop-start" in grant funding. The current lack of funding, short-term funding cycles and past technology-prescriptive approaches have disrupted the market, created uncertainty among customer and vehicle manufacturers and hindered further potential CO₂ savings. The essence of any funding programme is to ensure long-term planning and investment to kick-start the market. Industry hopes that lessons have been learnt and are being transferred to DfT funding going forward.

Q4. What realistically the DfT could achieve by 2010 and 2020 in terms of reducing transport-related carbon emissions, and the role that demand management should play in doing so?

2.11 The combination of a policy on fuel and vehicle technology to recognise total lifetime emissions from well-to-wheel, and to promote the best use of fuel and vehicle technologies to make the greatest total CO₂ reductions.

2.12 Enable and target consumers to increase awareness of their ability to reduce CO₂ from road transport when purchasing and using road transport.

2.13 Support a high quality, well managed road transport infrastructure to allow consistent, safe journey times.

2.14 SMMT supports demand management measures as one key set of instruments to reduce congestion and CO₂ from road transport and is engaged in some local demand management schemes under the DfT's Transport Innovation Fund (TIF). We believe that Government must act now on road demand management, provide a clear national framework and fully support effective "soft" transport policy measures that can deliver immediate CO₂ savings. Managing the infrastructure, fiscal policy and driver behaviour/attitude all contribute to potential CO₂ emission benefits, alongside demand management as outlined in Annex 1.

2.15 Ensure public transport offers a quality, well-priced integrated option and that the public are well informed on transport modal choices through initiatives such as Transport Direct (www.transportdirect.info).

Q5. What specific steps the department should now take to reduce road transport carbon emissions and congestion over the next decade?

2.16 The DfT could envisage action in the following key areas:

— Technology—encourage the development of low carbon vehicles for production and sale in the UK.

— Biofuels—develop the RTFO and ensure high quality fuel standards are in place to support future development.

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Climate commitment: Meeting the UK's 2010 CO₂ emissions target

— Driver education—promote an eco-driving style through the driving test and after.

— Congestion/demand management—develop consistent, high quality national standards to demand management measures under the Transport Innovation Fund (TIF).

— End users—understand the attitudes and needs of different vehicle end users, be this cars or commercial vehicles. Target effectively their needs and aspirations.

— Public authorities—use the purchasing powering of this sector to support and benchmark low carbon technologies on a performance-based, technology-neutral approach.

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IN RELATION TO THE DEPARTMENT FOR TRANSPORT'S POWERING FUTURE VEHICLES STRATEGY

Q1. Whether the targets set out in the Powering Future Vehicles Strategy were adequate and what progress has been made against them since 2002?

2.17 The Government's "Powering Future Vehicles" strategy, published in 2002, established two challenging targets on the uptake of low carbon vehicles. The following remarks will assesses what progress has been made:

2.18 By 2012, 10% of all new car sales will be cars emitting 100g/km CO₂ or less at the tailpipe.

In 2004, there were 481 registrations of new cars that emitted 100g/km CO₂ or less. This represented less than 0.1% of the 2,567,269 UK new car market in 2004. The complete withdrawal in 2005 of the Energy Saving Trust's (EST) grant funding programme for low carbon vehicles and previous short-term funding cycles failed to accelerate the market adoption of these vehicles. Currently, consumer uptake for low carbon diesel models and hybrid vehicles falls predominately into the 101-120g/km VED band (Band B) rather than the 100g/km or less band (Band A). Support and growth of this sector of the market is an important element toward the next step leading to the accelerated uptake and introduction of models with a tailpipe CO₂ of less than 100 g/km.

2.19 By 2012, 600 or more buses coming into operation per year will be low carbon, defined as 30% below current average carbon emissions.

The target of achieving 600 low carbon buses by 2012 is highly challenging, representing around 15% of annual UK bus registrations. In 2003, the Low Carbon Vehicle Partnership (LowCVP) developed a Low Carbon Bus Programme to help promote the introduction and market uptake of low carbon buses. EU approval of the programme is still outstanding and the momentum within the industry to work towards the Powering Future Vehicles target is at risk of being lost. The current structure of the Bus Service Operators Grant does not provide sufficient incentives for operators to consider alternatives to already fuel efficient diesel technology.

2.20 Sales of ultra-low carbon cars by 2020

Towards 2020 carbon-optimised combinations of low carbon vehicle technologies and fuels will provide the greatest potential for reducing well-to-wheel greenhouse gas emissions from new cars—subject to affordability and the existence of a supporting infrastructure being in place. The EUCAR, JRC, CONCAWE "Well-to-Wheels analysis of future automotive fuels and powertrains in the European context" demonstrates how carbon savings and cost vary significantly between different fuel options, depending on feedstock, production and conversion process and use efficiency[3]. A definition of "ultra-low carbon" cars and targets has to take the well-to-wheels analysis into account. Government strategy has to become fully integrated itself to foster the potential of carbon optimised fuel and vehicle technology solutions in the future.

2.21 Other targets. SMMT supports the work in the Low Carbon Vehicle Partnership (LowCVP) which is trying to understand how reductions in CO₂ from light goods vehicles can be achieved. The recently established Centre of Excellence for low carbon and fuel cell technologies (CENEX) and the Foresight Vehicle programme are critical to stimulate manufacturing and supply chain targets. Close collaboration between DfT and DTI to ensure that the Government's low carbon vehicle ambitions are adequately reflected in the DTI's technology funding programme is critical to achieve a competitive advantage from the move to low carbon vehicles and fuels for the UK.

2.22 Looking forward, SMMT believes that the DfT's Powering Future Vehicles strategy should rely on more than technological progress from vehicle manufacturers to deliver road transport CO₂ reduction targets. Targets need to fully take into account the impact that fuel technology improvements, behavioural factors and car usage can have on achieving a significant shift towards reduced carbon emissions from road transport.

Q2. What organisations and funding sources are involved, whether there is adequate co-ordination between them, and whether the overall funding available and spent in support of the strategy is adequate in view of the environmental challenges DfT is facing?

2.23 Since the release of Government's Powering Future Vehicles strategy and the Automotive Innovation and Growth Team (AIGT) report in 2002, SMMT has seen a growth in the number of bodies with the responsibility for engaging with stakeholders and consumers to promote the shift to low carbon vehicles and fuels. The key bodies that now exist in the field of road transport include CENEX, the Energy Saving Trust, Foresight Vehicle and the LowCVP. Departments behind the Powering Future Vehicles strategy are DfT, DTI, DEFRA and HM Treasury. DfT and DTI are driving the strategy, taking the lead in their respective areas of interest, DfT for vehicle targets and fuels, DTI for CENEX and manufacturing.

2.24 SMMT welcomes the work of these bodies and their objectives. However, there exists a significant potential for overlap between these bodies who are working towards a similar remit focused on the supply side of the low carbon vehicle agenda (ie vehicle technology) whilst a complementary level of engagement on the behavioural aspects of the agenda and "soft measures" is missing. SMMT supports high quality co-ordination between the existing bodies to ensure best value from Government funding. Greater active involvement of DEFRA and Treasury in the LowCVP to support future work on consumer attitudes, behaviour and sustainable consumption would be welcome.

2.25 SMMT is concerned that behavioural aspects and the role of "soft" transport policy issues in addressing CO₂ emissions from road transport do not seem to have an appropriate level of organisational and funding support in the UK. In October 2004, the DfT published "Smarter Choices: Changing the way we travel", which examined a range of "soft" transport policy measures, which provide motorists with better information and opportunities to help them seek appropriate methods of reducing their car use. The main options identified for reducing car use were workplace and school travel plans, personalised travel planning and public transport information, car clubs and car sharing schemes, and teleworking, teleconferencing and home shopping. A high intensity scenario, achieving a significant shift to these soft measures between 2004 and 2014, would deliver a nationwide reduction in all traffic of around 11%.

2.26 Consumer attitudes and behaviour can be either core enablers or core barriers—they critically determine whether low carbon technologies and fuels are able to penetrate the UK market in significant numbers and whether CO₂ from the drive phase can be substantially reduced. Given the strategic significance of better understanding consumers' attitudes and choices, SMMT strongly believes that greater emphasis should be given to this core area in future DfT and Government policy, strategy and communication. DEFRA, DfT and Treasury should improve the co-ordination of their activities relating to sustainable consumption in road transport and to developing key environmental messages for motorists. Cross-departmental learning would not only deliver cost benefits but also help to develop effective soft transport policy and taxation measures, based on evidence, to help engage with consumers on the way their motoring choices behaviour impact upon the environment and contributes to CO₂ emissions.

ANNEXES

1. SMMT mind map of managing CO₂ emissions

2. SMMT mind map of improving road space utilisation

3. List of abbreviations and key stakeholders

4. SMMT diagrams of virtuous circle & conflicts on sustainable mobility

Source: SMMT 6th Annual Sustainability Report "Towards Sustainability"—Oct 2006 (www.smmt.co.uk/publications).

1 Competitive Automotive Regulatory System for the 21st Century (CARS 21)-http://europa.eu.int/comm/enterprise/automotive/pagesbackground/competitiveness/cars21.htm Back

2 10% of total CO₂ emissions are emitted when a vehicle is being produced and 5% of emissions are produced when a vehicle is recycled as an End of Life Vehicle (ELV). (Source: LIRACAR) Back

3 For a full description of the study including assumptions, calculations and results, interested parties should consult the full set of reports and appendices available at http://ies.jrc.cec.eu.int/WTW Back