House of Commons - Environmental Audit

Select Committee on Environmental Audit Written Evidence

Memorandum submitted by the Environment Agency

SUMMARY

The Environment Agency welcomes this opportunity to provide written evidence on the progress of the UK Government in reducing carbon emissions from transport. We offer the following comments:

— We welcome the inclusion of the Department for Transport in the Public Service Agreement to reduce greenhouse gas emissions to 20% below 1990 levels by 2010. There is an outstanding need to put this into practice through measurable goals for transport sector emissions, backed with a package of credible policies to meet the objective.

— The Government should introduce a programme to monitor performance of policy against expectations, making adjustments as necessary and clearly outline what will happen as it becomes more evident that the measures designed to reduce emissions are not delivering.

₂

— A new package of measures, incorporating existing programmes, should be developed and focus on four main approaches:

1. switching to lower carbon fuels, including biofuels;

2. improving vehicle efficiency, both in energy conversion and increased occupancy;

3. switching transport demand to other, less carbon intensive, modes; and

4. reducing the demand for mobility through spatial planning.

— Making progress with these four approaches will require people to make different choices and make behaviour changes. The Government's 2005 sustainable development strategy provides a government-wide framework for helping people to make better choices. The four part framework includes:

1.	Enable better choices	Access to renewable fuels, mandatory measures to replace the failing EU voluntary agreement, public transport provision, better planning.
2.	Encourage change	Fiscal measures including more graduated vehicle excise duty, road pricing, and inclusion of transport in the ETS, enforcing speed limits.
3.	Engage with people	Travel plans, communications, vehicle labelling to properly inform users about running costs.
4.	Lead by example	Sharpening the Government's own transport strategy, use of procurement to encourage new technologies.

1. INTRODUCTION

While other sectors have seen their CO₂ emissions decrease, those from transport have risen throughout the 1990s and now account for around one fifth of the UK's total CO₂ emissions. 95% of these emissions come from road transport. Emissions from aviation and shipping are excluded from the domestic target and Kyoto commitments.

Transport has not taken the same burden in reducing emissions to meet climate change targets, as have other sectors. While other sectors have made cuts in emissions since 1990, emissions from transport have increased (from 40.9MtC in 1990 to 43.8MtC in 2003 for all greenhouse gases.)[11]

The Government's projections[12] show road transport emissions accounting for a share of total CO₂—increasing from 18% in 1990 to 27% by 2020. In absolute terms, road transport emissions will have increased by 28% compared to 1990, when CO₂ from the rest of the economy is projected to fall by 22%. If the UK is to meet its commitment to move beyond its Kyoto target towards its goal to put itself on a path to reduce carbon dioxide emissions by 60% by 2050, with a cut of around 40MtC, the pressure to control transport CO₂ emissions will increase further (see figure 2). The Sustainable Development Commission recommends a target to contribute to the UK's 60% cut in CO₂ emissions by 2050 is a 50% cut in emissions from road transport by 2025 (over 1990 levels).[13]

1.1 Environment Agency's role in transport and climate change

The Environment Agency is the Government's principal adviser on the environment. Although we have few formal transport powers (with the exception of those relating to inland navigation in certain areas), decisions taken in transport policy have environmental impacts that affect our role in managing air, water and land, and in responding to climate change.

We are the Competent Authority for the EU ETS in England and Wales. The Environment Agency also regulates the emissions from major industrial activities, responsible for 40% of UK GHG emissions. We take a lead role for England and Wales in adapting to some of the serious effects of climate change, including flood risk and water resources management.

We have developed a Green Transport Strategy for the Environment Agency's own business activity so we can play our part in reducing the day-to-day impacts of our business on the environment.

1.2 Targets

The Transport 10 Year Plan[14] summarised the expected impact of policies to reduce greenhouse gas emissions:

The levels of investment in the Plan will help to develop the transport measures described in the UK's draft Climate Change Programme 2000. Together with the 4.0 MtC anticipated from the voluntary agreement with car manufacturers they are expected to deliver savings in CO₂ emissions in 2010 equivalent to 5.6 million tonnes of carbon (MtC) [. . .]. This compares with the range of 4.0 to 7.3 MtC illustrated in the draft Climate Change Programme 2000. Further savings should be achievable with additional measures under consideration, including further improvements in vehicle efficiency and new technologies, as well as those discussed in the next chapter.

These savings were specified against the expectation of a sharply rising baseline:

The bulk (4.0MtC) of the savings in the Climate Change Programme (figure 3) were expected to come from the EU manufacturers voluntary agreement, company car taxation and VED changes with the Ten Year Plan delivering a further 1.6MtC by 2010 as shown in figure 4. These policies were expected to contain transport emissions in 2010 to a small increase. Latest figures show that transport CO₂ emissions in 2004 are about 3% higher than 2000, roughly in line with expectations. However, it is hard to track how much of the change in transport emissions is due to policy intervention as opposed to other factors.

Improved Reporting. Though the Government reports greenhouse gas emissions from transport, it does not do this in a way that allows assessment of the effectiveness of the policies and progress against objectives. The annual reporting of greenhouse gas emissions is not easily compatible with either the targets or policy measures in the Climate Change Programme 2000 or Transport Ten Year Plan. For example, there is no equivalent of figure 3 above plotted with an "actual" line on it and data is reported separately for greenhouse gases and not aggregated at sectoral level as in the plans. In terms of the effectiveness of the policies, there is no "scorecard" indicating a red, amber or green status, indicating whether the measures are working.

Public Service Agreement. We welcome the DfT's inclusion in the Public Service Agreement to reduce greenhouse gas emissions to 20% below 1990 levels by 2010. However, there are no concrete targets or guidelines as to how much the transport sector will contribute to the PSA and by what means.

EU voluntary agreements. The UK motor industry is part of a voluntary agreement (ACEA) negotiated in 1998 between the Commission and European car manufacturers to reduce average new car CO₂ emissions across the EU (15) by 25% by 2008. This establishes a target of 140g/km in CO₂. The EU has also committed to reduce emissions from new cars to 120g/km by 2010. The UK is some way off this target at 171.4 g/km in 2004.[15] Thiscurrently lags behind the EU average Given that much of the policy response rests on the success of this voluntary agreement and the flanking measures of graduated VED and company car taxation, this must be a concern.

Company Car Tax. Since 2002 drivers of company cars pay income tax equal to a proportion of the vehicle list price based on vehicle carbon emissions. Evaluation of the company car tax reforms, published in April 2004, showed that the changes are making significant carbon savings, forecast to be between 0.5MtC and 1.0 MtC per year in the long-run. The Government will announce the company car tax thresholds for 2008-09 at Budget 2006.[16]

The Powering Future Vehicles Strategy is a 10-year Government plan to develop low carbon vehicles and fuels. The strategy set a target for 2010 of 10% of new car sales to be cars emitting 100g/km CO₂ or less at the tailpipe.[17]

The latest annual report stated that only 491 vehicles with a fuel efficiency of 100g/km CO₂ or better were sold in 2004. This is less than one in 4,000 of total UK car sales. The Strategy pledged "by 2010, 600 or more buses coming into operation each year will be low carbon." According to the most recent report the only progress that has been made is in defining what is meant by a "low carbon" bus.[18]

The Government has in place a number of targets to reduce emissions of carbon dioxide from its own vehicle fleet. It has a commitment to reduce all road transport CO₂ emissions from all Government departments by 10% (of 2002-03 levels) by the end of March 2006. By this date 10% of all fleet cars must be alternatively fuelled and single occupancy car commuting must be reduced by 5%.[19]

Congestion is a high priority—wasting valuable time, increasing carbon emissions and exacerbating air quality problems. Policies to address congestion have potential environmental gains, although this is not automatically the case.

2. POLICY RECOMMENDATIONS

The rise in greenhouse gas emissions from transport reveals an imperative to introduce new policies that will contain and then reduce the transport share of carbon emissions. The trajectory for transport should be consistent with the Government's goal to reduce emissions by 60% by 2050. A recent report[20] commissioned by the DfT demonstrates that a 60% cut in emissions could be possible as early as 2030, through a combination of strong behaviour change, and improvements in technological innovation and efficiency in cars.

The Government's Sustainable Development Strategy provides a framework for meeting the 2050 target. The strategy focuses on "the need to enable, encourage and engage people and communities in the move toward sustainability; recognising that the Government needs to lead by example" (see figure 5).[21] These principles can and should be applied consistently across all Government departments. We advise the DfT to apply these principles to achieve significant reductions in CO₂ emissions from transport.

The Government should apply this model to a new environmental transport strategy. We consider the possible elements in the sections below.

2.1 Enable

Policies should aim to provide alternatives to enable passengers to reduce travel or choose low-carbon modes of transport.

Alternative Fuels

We welcome the Government's announcement to introduce a Renewable Transport Fuels Obligation (RTFO) as a way of supporting the uptake of biofuels in the UK. A long-term biofuels strategy is needed to take the UK beyond the 2010 target (of 5% of all fuel sold on UK forecourts to come from a renewable source[22]). This should be part of an integrated transport, fuel and energy strategy in the context of climate change.

For the RTFO and the Biofuels Strategy we stress the need for sustainability checks being built into the system. We recommend that the Government focus grants and concessions on options with the lowest environmental impact. A labelling certification scheme would enable buyers at the point of sale confidently to choose biofuels with the lowest overall environmental impact across the whole-life cycle and allow the fuels with the best environmental performance to be treated differently, for example for tax purposes.

Improved Vehicle Efficiency

As described above, the EU voluntary agreement appears to be failing. It is good practice for governments to respond to failing voluntary agreements by introducing more obligatory measures to improve the average fuel efficiency of new vehicles coming on to the market. This could be regulation or use of economic instruments. For example, the "carbon footprint" of European new vehicles could be subjected to a cap and trade regime or product standards regulation. Aggressive VED policies could induce the retiring of old "gas-guzzler" vehicles and encourage the entry of more low carbon vehicles on to the market.

Reduced Demand for Mobility and Switching Modes

Transport policy should be integrated with planning policy at all levels to give stronger support for compact, mixed use development, well-served by public transport and designed for walking and cycling. Key tests will be the approach to forthcoming expansion of housing in the South East and how this is integrated with Regional Transport Plans and investment in public transport infrastructure.

2.2 Encourage

Properly designed fiscal incentives can be used to encourage low carbon fuels, improve efficiency, promote modal switches, and reduce travel demand.

Fuel Duty to Internalise External Costs and Induce Fuel Switching

Fuel duty rates and duty rates for road fuel gases continue to be frozen. We accept the argument that rising market prices can have some of the environmental impact of escalating taxes. However, the important objective is to send long-term signals that motorists and other transport users should expect rising costs reflecting environmental impacts and imperatives to meet challenging climate change objectives. This is important to stimulate long-term changes in the pattern of use and design of vehicles. Fuel duty may be used to create a price differential.

Vehicle Excise Duty—to Encourage Better Fuel Efficiency

Excise duty for private vehicles is based on CO₂ emissions and fuel type. Current differentials are insufficient to substantially alter consumer choices. We support a more steeply graduated vehicle excise duty system. The gaps between the bands should be widened to encourage the purchase of lower carbon vehicles and there should be a new 7th band for the least fuel efficient vehicles. This could achieve carbon savings of 0.4-0.8 MtCe per year.[23] To increase the environmental gradient further, without increasing the total tax burden, it may also be possible to use a "feebate" system for VED in which large fees are paid by fuel inefficient vehicle owners and these are, in part, transferred as rebates to more fuel efficient vehicle owners.

National Road Pricing Debate

We welcome the initiative taken to start a national debate on road pricing, and hope this debate will accelerate implementation of such schemes, which could create a nationwide system of transport demand management, in conjunction with more urban congestion charge schemes such as in London. We would be concerned if eventual schemes were revenue neutral and solely based on congestion, since this could theoretically lead to higher road transport emissions. A revenue raising scheme could cut emissions by 8% in the year 2010.[24] Policies that address traffic congestion should be designed to deliver climate change and air quality objectives as well. Research shows that between 2002 and 2003 within the London Congestion Charge area, transport CO₂ emissions fell by 19.5%.[25] We would be concerned if the introduction of a system of limited "hot-spot" coverage for congestion charging was combined with a scaling back of fuel duty. This would be likely to increase driving and worsen fuel efficiency in uncongested areas.

Road Transport and EU ETS

The Government should consider the feasibility of incorporating the relatively small number of road fuel suppliers into the EU ETS. This should not replace road fuel duty, which is a revenue raising measure. High levels of taxation on road fuels are justified even if carbon emissions are controlled via the ETS. This is because of multiple transport impacts (noise, air quality, waste, oil industry impacts) and the infrastructure costs of road transport

Enforce National Speed Limits

National speed limits should be enforced. France enforced strict speed limits on main motorways in 2003 and succeeded in reducing carbon emissions by 19%.[26] Assessments by the Sustainable Development Commission expect savings of 1.5MtC could be saved per year through speed control measures.[27] Limits in towns and villages should be reduced to encourage walking and cycling.

Aviation

Aviation currently accounts for 3% of UK CO₂ emissions.[28] But, the proportion of human-induced climate change accounted for by aviation is three times greater than that of the equivalent amount of ground level emission of carbon dioxide. This is due to the range of greenhouse gas emitted by aircraft and the altitude at which they are emitted. However, emissions from aviation are excluded from domestic and international climate change commitments.

We are concerned that the Government policy as laid out in the Aviation White paper (2003) appears to be based on a "predict and provide" approach, but without acknowledging that Government policy can change demand by properly pricing environmental and congestion externalities. For example, by applying higher aviation fuel duties or auctioning landing slots.

We welcome the Government's commitment to bring aviation into the EU ETS from 2008, or as soon as possible thereafter. However, the extent to which this is an effective control measure depends on the approach to allocation of allowances. If no way can be found of covering aviation in the emissions trading proposals by 2008, the other measures such as an increase in Air Passenger Duty or an EU-wide emissions charge should be introduced with a commitment to reduce it when aviation is fully included within the ETS. The Aviation White Paper will be reviewed this year and we would like it to review the three-fold growth assumption, make airport growth conditional on using existing capacity better, eg through slot allocation, and promote alternative modes of travel.

2.3 Engage

Policies should be introduced to engage the public with greener transport options.

Demand Management: Soft Transport Measures

DfT should introduce more soft transport measures to help people choose to reduce their car use. Measures can decrease both congestion and emissions from transport. They include: workplace and school travel plans, travel awareness campaigns and increasing the availability of information, car clubs and car-sharing schemes, teleworking, and home shopping. DfT should require Local Authorities to give soft measures high priority in their Local Transport Plans. Sustainable Development Commission research found that introducing such measures could produce CO₂ savings of 0.5Mt/C per year.[29]

New Vehicle Labelling

The new labelling scheme was introduced in February 2005. It displays a variety of information relevant to car buyers, such as how fuel efficient a vehicle is and how much the motorist can expect to pay in fuel bills. Vehicles are ranked in bands to show the environmental impact of the vehicles. DfT should build on the success and high-profile of the label by introducing clear accessible CO₂ information and this should be linked to a new extended seven band VED.

2.4 Exemplify

The Government should lead by example by introducing policies to reduce emissions within its own Government departments.

Department Internal Targets

The Government is seeking to reduce its own absolute emissions by 12.5% by 2010-11. This year departmental emissions actually increased by 1% against the 1999-2000 baseline year.[30] Complete data is not available and therefore it is difficult to establish whether departments are likely to meet their March 2006 target.

Public Procurement

The Government should design a simple, coherent vehicle procurement and car rental strategy. This should include the purchase of vehicles that have been successfully demonstrated by DfT/DTI vehicle technology programmes.

Environment Agency Targets

We have produced our own Integrated Green Transport Strategy and a Green Transport Plan for Agency business travel in order to achieve a reduction in the Agency's direct contribution to global warming and poor local air quality. Our aim is a 50% reduction (from a 2001-02 baseline) in our total transport emissions from business travel by car by the end of March 2007. We are more than on course to meet this target, in 2004-05 we had already made reductions of 41%.

3. CONCLUSIONS

The Government needs to introduce a coherent environmental transport strategy that is consistent with its stated aims to reduce greenhouse gas emissions and to improve air quality and quality of life. Such a strategy would address fuels, vehicle efficiency, modal choices and the underlying demand for mobility. The Government's sustainable development strategy provides an excellent framework in which to develop measures that will change behaviours and help people make more sustainable choices over the long term.

February 2006

11 DEFRA, Environment In Your Pocket, September 2005. This includes all greenhouse gases. Back

12 Department of Trade and Industry Updated Energy Projections, November 2004. Back

13 Sustainable Development Commission, Submission to the Climate Change Programme Review, 2005. Back

14 Department for Transport, The Transport Ten Year Plan 2000. (Para 8.9.) Back

15 Powering Future Vehicles Strategy and the Third Annual Report (pub 20th December 2005). http://www.dft.gov.uk/stellent/groups/dft-roads/documents/divisionhomepage/032479.hcsp Back

16 Pre-Budget Report, Chapter 7, Dec 2005.
http://www.hm-treasury.gov.uk/media/FA6/45/pbr05_chapter7_173.pdf Back

17 Powering Future Vehicles Strategy. Back

18 The Third Annual Report. Back

19 The Third Annual Report. Back

20 Looking Over the Horizon: Visioning and Backcasting for the UK Transport and Policy, DfT Horizons Research Programme 2004-05. Back

21 Securing the Future: Delivering the UK's Sustainable Development Strategy, HM Government, March 2005. Back