House of Commons - Environmental Audit

Select Committee on Environmental Audit Ninth Report

Government strategy - priorities and effectiveness

16. The Government has very clearly set out both its explanation for why transport is the odd one out in terms of consistently rising emissions, and its defence of its approach to managing these emissions, in the opening paragraphs of the Transport chapter of Climate Change: The UK Programme 2006 (CCP 2006):

It is important to be clear why transport emissions are rising, especially at a time when emissions from most other sectors are falling. As the economy grows, people travel much further than they used to and buy more goods from all over the world.

As they get more prosperous, they also tend to choose to travel in a way that uses more carbon. Instead of walking, they are more likely to take the bus and instead of taking the bus they go by car or by train. They also heat their homes more and their businesses use more fuel. But the impact on travel is larger because in a growing economy the demand for transport fuel grows faster than the demand for other kinds of fuel and so transport's share of total emissions is likely to increase. […]

This is the difficult backdrop against which the Government's decisions are made. What we need to do is on the one hand reduce the environmental impact of the journeys people make and on the other hand help people make more informed travel choices, which will benefit both them and the environment.[21]

17. In slightly more detail, the Department's strategy for achieving its carbon reduction aims is composed of four main priorities for action, as the Secretary of State for Transport outlined before the Committee:

Firstly, to reduce how much fossil carbon there is in transport fuel. […] An important step towards this is ensuring that a certain percentage of transport fuel sold in the UK is made up of biofuels. […]

Secondly, improving technology to make vehicles more fuel efficient. That means working closely with manufacturers to deliver cleaner and greener cars. […]

Thirdly, encouraging people to be more aware of the environmental impact of the journeys they make and encourage them to make more environmentally friendly journeys. […] We need to continue to help people make informed choices about when and how they travel, and what type of vehicles they choose to buy in the future.

Fourthly, working towards including transport in Emissions Trading Schemes and using market mechanisms for environmental ends. […] In the United Kingdom we continue to push for a well-designed Emissions Trading Scheme to ensure that the aviation sector tackles its emissions. In time, extending emissions trading to other forms of surface transport, not just the aviation industry, could have a big impact on the reduction of carbon as well.[22]

18. In turn, these priorities break down into a number of individual policy instruments, summarised, along with their projected impacts, in Figure 4. The Government projects these policies to save around 6.8MtC by 2010. Overall, the Government estimates that as a result of the two new measures announced in CCP 2006, carbon emissions from transport in 2010 will be 5% lower than its previous projections for that year; and that, taking these together with the existing measures from the initial Climate Change Programme launched in November 2000, carbon emissions will be some 13% lower than they would have been had the Government taken no action at all.[23] We would, however, note that in absolute terms, even assuming a 6.8MtC saving from Government initiatives, annual emissions from transport are still projected to have risen by around 3.9MtC or 10% since 1990.

Figure 4 Principal policy instruments for reducing carbon emissions from transport

Key policy instruments Start date Original planned annual impact¹ in 2010 (Million tonnes carbon) Latest projected annual impact² in 2010 (MtC)

Existing measures (preceding CCP 2006)

Voluntary Agreement package (includes manufacturers' voluntary agreement,
company car tax reform and graduated
Vehicle Excise Duty)
1998 onwards (in stages) 4 2.3

(of which, Company Car Tax reforms 2002 - 0.5)

Fuel Duty Escalator³ 1993 1 - 2.5 1.9

Wider transport measures⁴ 2000 1.6 0.8

Sustainable distribution (Scotland & Wales) 2000 0.1 0.1

Total (existing measures) 1993- 6.7 - 8.2 MtC 5.1 MtC

New measures (introduced in CCP 2006)

Renewable Transport Fuels Obligation 2008-09; in full effect 2010-11 - 1.6(net reduction=1)⁵

Future Voluntary Agreement After 2009? - 0.1

Total (new measures) 2008- - 1.7 (1.1 net)

TOTAL (preceding and new measures) 1993- 6.7 - 8.2 6.8 (6.2)

Future and unquantified measures

Assorted measures to promote "smarter travel choices" Ongoing ? ?

Inclusion of aviation in the EU Emissions Trading Scheme (ETS) 2008-13? ? ?

Inclusion of surface transport in the EU ETS After 2013? ? ?

National road pricing scheme 2014? ? ?

Sources: Synthesis of Climate Change Policy Projections, Defra, 2006; and Climate Change: The UK Programme 2006
Notes:
1 Projections in UK Climate Change Programme 2000, DETR, November 2000
2 Projections in Climate Change: The UK Programme 2006, Defra, March 2006
3 Fuel duty escalator - The Government has compared the impact that the fuel duty escalator between 1993-99 had on demand to the impact on demand that simple revalorisations (rises in line with inflation) in fuel duty between 1993-99 would have had. Using this as a basis, it found that because of the ongoing higher fuel price due to the fuel duty escalator, demand for fuel in 2010 will be lower, and that this lower demand equates to a carbon saving of around 1.9MTC in 2010.
4 Refers to the impact of a programme of investment, announced in the 2000 Ten Year Plan and revised in the Future of Transport White Paper.
5 Climate Change: The UK Programme 2006: This figure follows the internationally agreed methodology for allocating emissions to individual states, which prevents global double counting of emissions. As such it does not take into account the carbon emitted during the production of biofuels produced abroad but consumed in the UK. When this is taken into consideration the net global reduction in carbon dioxide emissions is 1MtC.

19. Even without looking at the appropriateness and effectiveness of the main policy instruments individually (which we shall do in subsequent sections of this report), there is much that can be said about this overall package of policies. Notably, we can ask whether the scale of projected savings is great enough, whether the trend in achieving reductions is moving in the right direction, and whether important measures are being introduced fast enough.

20. On the scale of impacts, if the Government's estimate of a 1.7MtC saving from the two new measures in CCP 2006 were correct, emissions from domestic transport would be projected to stand at around 43.1MtC in 2010, roughly the same as they were in 2004. This would represent the first time in years in which the growth in carbon emissions from domestic transport had flattened out, certainly a significant achievement. However, if the carbon emitted during the production of imported biofuels were taken into account, the net estimated savings from the new measures would be cut to 1.1MtC.[24] Furthermore, given that overall projections of carbon savings in the 2000 Climate Change Programme have had to be revised downwards in the 2006 version, we should treat these projections with some caution. And even if they are accurate, their value is reduced because they do not take into account emissions from the fastest growing source, aviation. In fact, none of the existing measures in the Climate Change Programme has any impact on this sector.

21. On the trend in policy instruments and projected savings from them, there have been some important slippages in delivery against carbon savings that were originally projected. Notably, the Voluntary Agreement package had been projected to save 4 MtC annually by 2010, but this has now been revised down to 2.3MtC. Overall, Figure 4 shows that, even with the addition of the two new measures in CCP 2006, transport's net annual carbon savings in 2010 are now estimated to be some 0.5MtC below the lower end of the Government's original projections made in 2000. This betrays a dismal failure of purpose from the Department for Transport.

22. On the timing of major measures, while the Government states that inclusion of aviation within the EU ETS still might come as early as 2008, the Aviation Environment Federation suggested to us it was more likely to be 2010 at the earliest and more probably 2013. We feel the latter date to be much more credible given the formidable number of details still to be agreed before this can go ahead. We could expect the inclusion of surface transport in the ETS, which is at a much more speculative stage than is the case with aviation, to take still longer. As for the introduction of road pricing, the Department has suggested that a national system would not be technologically feasible before 2014.[25] This seems a considerable time to wait, especially in the context of the proposed Lorry Road User Charge which had been due to come into operation in 2007-08, but which the Government last year cancelled, with the explanation that this would be subsumed into the forthcoming national scheme to cover all road users. Overall, we find it disappointing that, following the abolition of the fuel duty escalator, and with other policies not coming into effect for several years, the Government currently has only one policy instrument—the "Voluntary Agreement package"—fully in operation and delivering significant savings in carbon emissions from transport.

23. In defending his Department's record on this issue, the Secretary of State was keen to point out that nearly a quarter of all the carbon reductions in the Climate Change Programme 2006 come from transport.[26] However, two main elements of the Voluntary Agreement package - Company Car Tax and Vehicle Excise Duty —are the preserve of the Treasury, while the other is an agreement made by the European Commission and implemented by private car firms. Moreover, other policies are yet to begin operation, while the separately listed "Sustainable distribution" measures come under devolved authorities. What this means is that, in fact, the existing measures which are the responsibility of the Department for Transport itself amount to only around 3.6% of the CCP's 2010 savings.[27] Considering that this department has policy responsibility for the worst-performing sector of the economy in terms of carbon emissions, this is not nearly good enough.

DfT's analysis of the problem

24. We warmly welcome the seriousness with which the new Secretary of State described his approach to working across Government to tackle carbon emissions, and look forward to the positive impact he promises to have on DfT's climate change strategy.[28] At the same time, we would characterise DfT's policy package, up to this point, as being projected to make some important contributions, but lacking in ambition, and suffering from a stuttering and piecemeal application. We could see this, for instance, in the facts that the Government initially increased the fuel duty escalator before abolishing it in 1999, that projected carbon savings from transport have had to be revised downwards since 2000, and that the Government proposed a Lorry Road User Charge scheme to start from 2007-08, only to scrap these plans last year in favour of a comprehensive road user pricing scheme, to be developed and trialled on a local basis but not implemented nationally until around 2014. Considering that "Climate change is probably the greatest long-term challenge facing the human race", this appears a case, ultimately, of acting neither fast nor far enough. To a great extent this would seem to be a natural consequence of the Department's analysis of both the problem it faces and its room for manoeuvre.

25. This situation is brought into further relief by an analysis of recent trends in the relative costs to consumers (i.e., passengers/drivers) of different modes of transport. Looking back simply over the past decade (looking back further, to 1980, shows a continuation of the same trends), Figure 5 shows that the real costs of motoring have declined for the past six years, while the average real cost of airline tickets is around the same as in 1996. Given that disposable income has increased appreciably, this has made driving and flying considerably more affordable than before. Meanwhile, the real cost of bus and train fares has increased sharply, by 31% and 16% respectively; in the case of buses, this has outpaced the rise in disposable income, meaning they are not just less affordable relative to car use, but absolutely less affordable than they used to be.

Figure 5 Higher carbon modes of transport have become cheaper than lower carbon modes

figure 5

26. Here is a clear reason for the ongoing rise in emissions from transport. But it is certainly not an inevitable state of affairs, over which the Government could or should have no influence. In view of the imperative to take bold actions in order to help avert dangerous climate change, the Department should actively encourage modal shift towards lower carbon modes of transport, and discourage marginal car and plane journeys. As part of this, the Government should take much more decisive action to shift the balance of affordability more in favour of trains, buses, and lower carbon cars and lorries.

27. More widely, some of the non-governmental organisations (NGOs) which gave evidence to us expressed their concern about the Department's fundamental thinking on the relationships between transport, economic growth, and climate change. Sustrans, for instance, questioned the strength of the link between the expansion of transport infrastructure and economic growth, which forms a major platform of the Department's beliefs and activities.[29] Friends of the Earth, meanwhile, questioned whether the Department's understanding of economic growth was too narrow, implying that it would not focus enough on overall wellbeing.[30] In the past our predecessor Committee severely criticised the expansion of airport infrastructure envisaged in the 2003 Future of Aviation White Paper, not just for its projected impacts on climate change, but also taking issue with the Department's assessments of the likely effects on the UK economy.[31] While we recognise the difficulties in decoupling economic growth from increases in carbon emissions in the transport sector, we are concerned that the Department seems to have a fatalistic attitude which sees carbon-intensive activities and economic growth as going hand in hand. The Department must be much bolder in intervening to break the upward spiral of economic growth leading to higher emissions. The need for this is highlighted by the listing in CCP 2006 of "Increased traffic growth due to GDP growth" as by far the biggest factor—plus or minus—on domestic transport emissions in the period 1990-2010.[32] At over 10MtC, it shown greater than the quantified savings from all of the Government's package of transport policies combined.

DfT's priorities and targets

28. The Department conveys the consistent impression that, while it does acknowledge climate change as a serious problem, and while it is pursuing some dedicated policies to this end, it treats climate change as simply one priority among many others it must juggle, such as road congestion, economic productivity, and air quality. In other words, it is not treating climate change seriously enough. This was certainly Friends of the Earth's argument, in drawing our attention to recent comments about a future national road charging scheme made by the Transport Minister, Stephen Ladyman MP.[33]

29. To take another high profile example, in the 2004 Future of Transport White Paper, the Department announced the creation of a Transport Innovation Fund (TIF), which is set to become the single largest source of public investment in transport. In guidance published in January 2006, the Department states: "Through the TIF, we will be able to direct resources towards the achievement of two very high priority key objectives—specifically tackling congestion and improving productivity." It then explains that there will be two kinds of proposals for funding: "proposals which are principally "congestion schemes"—for which bids are invited from local authorities—and those which are principally "productivity schemes"—for which the Department will identify potential schemes after seeking the views of the Regional Development Agencies (RDAs) during the early part of 2006."[34] Given that one set of proposals are to come from individual local authorities, who are directed to make bids to ameliorate congestion, and that the others are to be influenced by RDAs, who are directed to think about regional economic development, it looks less than likely that, as currently designed, the TIF will bring forward many proposals primarily targeted at tackling climate change.

30. Because it is a global problem, whose worst effects we have not yet felt and are concerned to avert, climate change is a case in which it makes less sense to hand over decisions on infrastructure priorities to local and regional control, where more local and short term priorities will naturally predominate. At the very least, local and regional authorities need to be given very strong leadership and guidance on reducing carbon emissions by central Government. This is certainly not the case in guidance on the Transport Innovation Fund. The Government must ensure that TIF-funded projects give greater prominence to averting climate change.

31. Since Spending Review 2004, DfT has had a Public Service Agreement (PSA) target on climate change:

To reduce greenhouse gas emissions to 12.5% below 1990 levels in line with our Kyoto commitment and move towards a 20% reduction in carbon dioxide emissions below 1990 levels by 2010, through measures including energy efficiency and renewables.

However, DfT shares this PSA with the Department for Environment, Food and Rural Affairs (Defra) and the Department of Trade and Industry (DTI), and there are no sectoral targets for reductions in emissions specifically from transport. We received a number of submissions criticising this arrangement as failing to provide precisely the impetus to action, through accountability for a set target—"representing a contract between the public and Government"[35] - that the PSA regime is meant to achieve. As an example, Greg Archer of the Low Carbon Vehicles Partnership told us:

Mr Archer: […] The Department for Transport has a whole number of different priorities around managing demand and congestion, infrastructure to meet increased capacity, social equality issues; CO₂ issues are just one of their many priorities. The Partnership has felt for some time that the absence of a sectoral target for transport emissions and for road transport emissions specifically means that there has not been the focus on controlling transport emissions generally within the Department for Transport because there is not an overall target that the Department is trying to achieve. We recognise that they share in the PSA 20 per cent target but there is no clarity as to what proportion of that overall burden the Department for Transport is actually taking. I am not saying that transport should have the same target as other sectors; it should just have a target that it is working towards so we can see what progress it is actually making. […] Without that clarity and that directional policy I am afraid the Department for Transport will never put together the package of measures which are needed to address this issue.[36]

32. It would certainly appear that DfT's PSA on climate change is failing as a mechanism that might shine a light on the Department's efforts and hold it to account. DfT reports progress against all its PSA targets in an appendix of its Annual Reports. In the relevant part of its Annual Report 2006, while the Department does (though still in extremely skimpy detail) report progress against the "Fuel efficiency of vehicles" and "Carbon content of fuel", this is not put into context to allow a reader to judge what the contribution of these measures is to the overall PSA target. Against this overall target, the Department solely gives the collective progress against the Kyoto target and 2010 domestic targets. At no point does the Department quantify the carbon emissions resulting from transport as a sector, much less report that transport is the only sector in which emissions have been rising consistently since 1990 and are projected to carry on rising. In this way, the Department is able to claim credit for being on course to meet the UK's Kyoto target, even while it is presiding over the worst performing sector of the economy in terms of trends in emissions.

33. Whether a formal PSA target or not, the Government should establish a sector-specific target for carbon emissions from transport. DfT should be given ownership of this target, and should clearly and in detail report progress against it in its Annual Reports.

34. The question this begs then is what exactly that target should be. The Department has already commissioned a major piece of work which should shed very useful light on this—the "Visioning and backcasting of UK transport policy", or VIBAT report, by Professor David Bannister and David Hickman. This examined the potential for a 60% CO2 reduction in the UK transport sector over the period 1990-2030. The report concluded that this target is achievable, and came up with a series of individual policy proposals that would add up to the specified savings, while stressing that reaching the overall target would require a combination of both technological improvements and behavioural changes. While the Government would be free to set whatever specific target it would like, which would not necessarily be 60% by 2030, the VIBAT study should be an enormously useful resource in that it has quantified different policy instruments and examined the timelines in which they could be introduced and take effect. In other words, VIBAT should be capable of giving policymakers invaluable assistance in constructing a challenging but deliverable target for carbon reductions from transport. We were therefore dismayed by the Secretary of State's defensive distancing of the Department from this study.[37]We urge the Department to closely examine the VIBAT study in order to construct an ambitious and well-thought out target, specifically for reducing carbon emissions from transport.