Select Committee on Environmental Audit Written Evidence

Memorandum submitted by Modec


    —  Modec is an independent vehicle manufacturer. The core team, led by Chairman Jamie Borwick, previously developed the iconic TX1 London taxi.

    —  Modec has designed and developed new 50 mph, 120 mile range zero-emission electric vehicles. The first model is an electric van (The Modec Van), designed for use specifically in congested urban areas. This will be launched for sale at the Commercial Vehicle show in April 2006.

    —  An electric-powered bus is also being developed for release later in the year. Similar in design to the van, it will operate like a minibus with up to 16 seats, and is intended for use as a shuttle van by councils, hotels, airports etc.

    —  Modec's predecessor, the e-Mercury project, received a grant of £693,000 from the Energy Saving Trust for research and development. This grant enabled three prototype vehicles to be produced in 2004.  Since then, neither e-Mercury nor Modec has received any financial assistance from the Government.

Executive Summary

    —  Modec is an independent vehicle manufacturer of 50 mph, 120 mile range zero-emission electric battery powered vehicles. The first to be launched will be the Modec Van, designed as a light commercial vehicle specifically for sustained urban use.

    —  Operating as a mains-rechargeable vehicle, with the potential to be entirely powered from renewable energy, the Modec Van would save 66 tonnes of CO2 being emitted into the atmosphere per vehicle over a 12 year working life.

    —  Lower emissions could be achieved for CO2, and local pollutants such as NO2 and PM10, if Government programmes clearly targeted different types of alternative vehicles for different driving uses, most notably zero emission vehicles for urban use.

    —  A stable and secure fiscal and regulatory environment is essential to help increase the market penetration of zero emission and low carbon vehicles.

    —  Measures that could help increase the commercial take-up of electric vehicles include:

—  Sustained financial incentives to allow forward planning.

—  100% first year capital allowance for low carbon vehicles from HMRC.

—  Re-instatement of the PowerShift grant programme, focused on emissions outcomes.

—  Exemption for battery weight in applying restrictions to the driving of light goods vehicles.

    —  The Government wants the UK to lead the global shift to the low carbon economy, building competitive advantage for Britain's our automotive industries. Modec is offering a product for immediate market use that is capable of dramatically reducing carbon emissions and eliminating local air pollutants.

    —  Modec hopes that the Government will enable innovative companies like us to compete with established market players in offering quality vehicles at a reasonable price, thereby ensuring that zero emission and low carbon vehicles start to reduce the environmental impact of road traffic sooner rather than later.


  1.1  The Prime Minister said in his Foreword to the Government's 2002 Powering Future Vehicles strategy that ". . . the UK should lead the global shift to the low carbon economy, building competitive advantage for our automotive industries"

  1.2  As a small, independent manufacturer Modec is keen to play its part in helping the UK become a world leader in zero emission commercial vehicles.

  1.3  Recent Government-led programmes to encourage low carbon emission vehicles have tended to neglect electric vehicles. This may in part be due to misconceptions associated with old fashioned milk floats; but is probably more indicative of a desire to focus on new, blue-sky technologies, such as fuel cells, that are as yet unproven in commercial use.

  1.4  However, battery powered electric vehicles offer an immediately available, viable solution for reducing emissions, combining zero local pollution with ease of "refuelling" from an existing infrastructure that can draw on sources of renewable energy to also deliver zero CO2 emissions.

  1.5  Modec's hope is that the Powering Future Vehicles strategy can now be expedited for Light Goods Vehicles. Slow progress with the strategy has been made to date, notably in the car sector, but with limited assistance, existing electric vehicle technology could deliver substantial reductions in CO2 emissions from the Light Goods Vehicles sector.

  1.6  Modec's aim is to offer commercially viable, innovative solutions to the problems of greenhouse gas and other polluting emissions from commercial road vehicles. As an entrepreneurial British company, keen to play an immediate role in bringing zero emission vehicles to the marketplace, we look to the Government to ensure that a stable and secure fiscal and regulatory environment is in place. This will enable ourselves, and companies like us, to compete with established market players in offering quality vehicles at a reasonable price, thereby ensuring that zero emission and low carbon vehicles start to reduce the environmental impact of road traffic sooner rather than later.


    —  The Modec Van will save 66 tonnes of CO2 being emitted into the atmosphere per vehicle over a 12 year working life.[43] Operators are able to easily obtain their electricity from renewable sources, including wind, wave, hydro and biomass options.

    —  The top speed of the Modec Van is limited to 50 mph, a safe and appropriate maximum speed for driving in urban environments. It has a 70Kw motor that delivers 300Nm of torque, and therefore has no difficulty accelerating from stationary.

    —  The Modec Van is able to deliver a driving range of around 120 miles with a typical load.

    —  The battery has an average life span of around four years of heavy duty use (1,000 full charging cycles). Customers, however, will rent the battery and have it replaced when necessary.

    —  Compared to a hybrid vehicle, like the Toyota Prius, the Modec Van operates solely on electric power. The Prius is only able to travel one mile in pure electric battery mode, at a top speed of 34 mph. Its battery has a 1.78 Kwh capacity, compared with 85 Kwh in the Modec van.

Response to strategic issues raised by the Committee

2.  What progress the DfT is making against key carbon reduction targets; whether the targets set out in the "Powering Future Vehicles" strategy were adequate and what progress has been made since 2002

  2.1  The Powering Future Vehicles strategy (2002) is the key document with specific targets to reduce carbon emissions from road vehicles. The strategy brings a welcome focus to the automotive industry's efforts to bring low carbon emission vehicles to the commercial market.

  2.2  The initial strategy set two specific targets to reduce carbon emissions from cars and buses, and commits to develop other targets, including ones for ultra low carbon cars and for light goods vehicles.

  2.3  Progress since 2002 has been disappointing.

  2.4  For example, the Third Annual Report on the strategy, published in December 2005, in under-stated terms comments on the 2012 low carbon car target: "it was always anticipated that progress towards this ambitious target would be slow…. this has indeed turned out to be the case". Indeed, in 2004 only 481 vehicles were sold that met the Government's fuel efficiency target.[44] This is only 0.02% of all new car sales in 2004; demonstrating how much progress is needed if the Government's target of 10% by 2012 is to be met.

  2.5  Likewise, the setting of a target for ultra-low carbon car sales has been abandoned. This is particularly disappointing given the cited reason that there is: "great uncertainty as to which technologies will prove successful over such a long timescale."[45] Modec recognises that the target is intended principally for technologies like fuel cells, however electric vehicles like Modec's van are already "ultra low carbon", particularly when electricity is sourced from renewable suppliers.

  2.6  Moreover, Modec is disappointed that the Third Annual Report into the strategy can only offer the process of another "working group" on low-carbon light goods vehicles. Tangible measures to increase the take up of light goods vehicles already capable of delivering zero emissions could be promoted immediately, not least if electric vehicles were esteemed as highly as other technologies which are not yet technologically, let alone commercially, proven.

  2.7  Modec also notes the scaling back in reporting the Powering Future Vehicles strategy. Substantial annual reports were published in 2003 and 2004, with a greatly reduced report in 2005 coupled with the statement that future progress on the targets will be reported in the DfT's annual report instead.

  2.8  Whilst we recognise it is for the Government to decide the best way to effectively manage the strategy, we hope the scaled back reporting is not indicative of reduced commitment to achieving its objectives. Integration of the strategy into wider DfT will be welcome if this leads to more joined up thinking of how to tackle carbon dioxide and other air pollutants emitted from road vehicles (see section four below).

  2.9  Any reduction in assistance for low-carbon vehicles could seriously affect investment decisions in the industry. A stable environment, particularly in the durability of financial support measures is needed to encourage innovation.

Electric Vehicles and the Environment

  "Battery vehicles produce no tailpipe (exhaust) emissions. Furthermore, calculations show they have big CO2 benefits compared to conventional vehicles even when you consider the emissions from the power stations used to produce electricity to recharge their batteries."[46]

  Battery vehicles can, literally, plug into the existing electricity infrastructure to access renewable energy. There are at least eight suppliers of electricity from renewable sources:

    —  ecotricity

    —  Powergen

    —  npower

    —  ScottishPower

    —  Scottish & Southern Energy

    —  EDF Energy

    —  Green Energy UK

    —  Good Energy

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

  3.1  The Powering Future Vehicles strategy is "founded on focusing on the bottom-line low-carbon objective".[47] It also states that: "low carbon vehicles will have an important role to play in delivering air quality improvements, especially in urban areas."[48]

  3.2  Indeed, the Prime Minister in his foreword to the strategy sets out his vision for: "quiet and unpolluted city centres, with new vehicles run on clean and sustainable fuels."[49]

  3.3  This vision statement by the Prime Minister raises two key issues that should be central to a coherent strategy to reduce carbon emissions from transport:

    (i)  Reducing local air pollution should have equal significance alongside carbon emission reduction

    As the Deputy Prime Minister said, in his foreword to the Government's Air Quality Strategy, "Air pollution is a serious problem. Up to 24,000 people die prematurely every year in Britain because of its effects".[50] Road transport is the largest source of NOx, with 46% of total UK emissions in 2001, and the second largest of particulates, with 18% of total PM10 emissions.[51]

    While climate change is undoubtedly the greatest long term challenge, the increased take-up of vehicles with zero or low tailpipe emissions will enable other, more immediate, environmental and health benefits.

    (ii)  Carbon and other air pollutant emissions could be reduced more quickly if Government strategy promoted different types of low emission vehicles tailored for different journey types.

    Vehicle programmes to meet the Government's key carbon reduction targets tend to focus exclusively on the development of hybrids. Whilst hybrid vehicles have a role to play they are not a panacea. Instead, there should be a re-orientation of programmes to recognise that different vehicles are better suited for different journey conditions.[52]

    Some vehicles are almost exclusively used for urban use, eg light goods vehicles and buses. Battery electric vehicles are ideally suited for such exclusively urban use. They offer zero local emissions of air pollutants and CO2 and give the driver the high and variable power required for driving in traffic. For urban use they offer clear advantages over hybrids.

    There are no obvious near-term technologies available to reduce CO2 emissions on inter-city journeys, other than biofuels. Pure electric vehicles are unsuited for long range motorway journeys. The battery in a hybrid is almost inoperative in this application and instead confers a disadvantage due to additional weight and drivetrain inefficiencies compared to a conventional diesel engine.

    Hybrids offer flexibility, which users undoubtedly value, but which compromise their overall contribution to reducing CO2 emissions. They are better for the environment compared to conventional internal combustion engines in terms of CO2 in urban use, but are not as clean as pure electric vehicles. As explained above, Hybrids have the advantage of being able to undertake long-distance journeys in addition to urban duties, despite offering no benefits over conventional internal combustion engines on these longer journeys.

    Greater CO2 emission reductions would be achieved by encouraging zero emission electric vehicles for urban use and biofuel in conventional internal combustion engines for inter-city transport (or indeed a different mode of transport, such as a lorry or train) than by promoting Hybrids as a universal solution for all duties.

Comment from the British Lung Foundation

  One in five people is particularly at risk from air pollution. We are not all equally sensitive to air pollutants, people who already have a lung disease, the elderly and children are likely to be especially affected by high levels of pollution.

  The majority of city smoke comes from diesel motor vehicle exhausts, but in some areas emissions from coal burning or electrical generating power stations make up a significant proportion of total smoke. Large smoke particles are trapped in the upper air passages and causes straining of the nasal secretions, but smaller particles (PM10s) may travel deeper into the lungs.

  High levels of PM10s cause increased breathing difficulties in people with asthma, chronic bronchitis, emphysema and other lung conditions. They may also cause premature death in older people with heart and lung disease. For this reason, PM10s are now thought to be the most important of the commonly occurring air pollutants.

  3.4  The DfT's Annual Report for 2005 summarises Government-led measures to improve air quality and tackle climate change, eg through low carbon vehicles, but fails to deliver a truly joined-up strategy. For example, the Report states that: "there will be some areas (mostly urban and busy roadside locations) where, with present policies and technologies, it is likely that we will not achieve the objectives for NO2 and PM10 by the relevant dates (2005 and 2010 respectively)."[53]

  3.5  This failure to meet urban local air pollution objectives demonstrates a potential lack of coherence in the DfT's strategy. Lower emissions could be achieved for NO2 and PM10, as well as CO2, if Government programmes clearly targeted different types of alternative vehicles for different driving uses, most notably zero emission vehicles for urban use.

Fuel cells or batteries?

  Conventional wisdom is that hydrogen fuel cells will offer a cleaner and more efficient method of powering vehicles than other low-carbon power sources. However, scientific studies have shown that "power plant-to-wheel" efficiencies of battery electric vehicles are around 66%, while the comparable figure for hydrogen fuel cells is just 22%.[54] As a means to reducing CO2 emissions, electric battery vehicles offer an immediate solution to an immediate problem.

4.  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

  4.1  Immediate advances could be made to reduce transport related carbon emissions by 2010, and further by 2020, if the DfT introduced measures to help increase the take-up of light goods vehicles already capable of delivering zero emissions (see section 5 for suggested measures).

  4.2  Creating a regulatory environment where good consumer behaviour is rewarded is essential. The DfT could help with "demand management" and accelerate the reduction in carbon emissions from road vehicles, if it extended initiatives that acknowledged that consumers are making an environmentally-friendly choice. For example, the fuel economy label scheme launched by the Government in February 2005 could include an additional category for zero emission vehicles, to distinguish them from vehicles that only just meet the 100g/km of CO2.

  4.3  For the Modec van to be a success, first and foremost the vehicle must meet the customer's expectations for its utility as a light goods vehicle. For example, the van is capable of carrying typical payloads (eg up to two tonnes), has a storage capacity that can be configured for different customer needs, and offers excellent driving performance for urban use, eg top speed of 50 mph.

The effects of air pollution

  In January 2006, Ken Livingstone launched a consultation on the creation of a "Low Emission Zone" for London, aimed at improving air quality in the capital.[55] Improving the standards of diesel-driven lorries and buses will help, but this is not a radical course of action to combat pollution-induced respiratory diseases. Zero emission vehicles in town and city centres are the most effective method of stopping local air pollution and reducing carbon emissions.

  Transport Minister Stephen Ladyman said "The Government is committed to improving air quality. We support the Mayor's proposal for a Low Emission Zone for London, which could make a significant contribution towards achieving our air quality objectives, as well as bringing health benefits for Londoners."

5.  What specific steps the Government can take to reduce road transport carbon emissions over the next decade

  5.1  The Government has already introduced some measures to encourage the commercial take-up of zero, or low-carbon, emission vehicles. Measures include:

  (i)  Exemption from the London congestion charge, worth up to £2,000 a year, for vehicles on the PowerShift register.

  (ii)  Exemption from Vehicle Excise Duty for electrically powered vehicles.

  5.2  But more could be done. Welcome measures include:

    (i)  Sustained financial incentives to allow for planning

    The widespread take-up of alternative vehicles is undermined if financial incentives are withdrawn prematurely. There has been a significant loss of confidence among fleet managers in purchasing liquefied petroleum gas (LPG) vehicles after the 40% reduction in fuel duty began to be phased out after only two years. Similarly, the PowerShift scheme has been abruptly suspended after nine years.

    If innovate zero emission or low carbon vehicles are to penetrate the market, any incentives that are offered should be clearly defined. We believe stability is preferable to any short-lived incentives.

    (ii)  100% first year capital allowance for low carbon emission vehicles from HMRC

    100% first-year allowances (FYAs) may be claimed from H.M. Revenue and Customs by businesses using "cars with low carbon dioxide emissions".[56] This exemption does not apply, however, to vans and other vehicles. Equally, FYAs are available for assets appearing on the Enhanced Capital Allowance (ECA) list. Whilst we believe Modec's vehicles would pass the various criteria needed to qualify for the ECA list, the application process is lengthy and the earliest Modec's technology could be registered would be 2008. A two year wait to be considered for such an important allowance is a severe disincentive for companies attempting to bring innovative vehicles to the market.

    Accordingly, Modec would like to see 100% first-year allowances extended to vans, as well as cars. Given the nature of the vehicle's need to return to a base to re-charge, this should not cause any of the concerns over the giving of state aid, which have, in the past, been raised as barriers to providing tax incentives to light commercial vehicles which are able to operate cross-borders.

    (iii)  Re-instatement of the PowerShift grant programme—focused on emissions outcomes

    This previously offered a 75% rebate on the difference in purchase cost between a diesel and zero emission vehicle. The scheme could be re-introduced, subject to European Commission approval, for zero emission vehicles only to drive the take-up of vehicles with the least environmental impact.

    Modec hopes that the funds saved whilst EU approval is sought, should be set aside, and either re-applied to the programme if and when it can be re-instigated or re-directed to other programmes that could help the take-up of low carbon vehicles.

    (iv)  Exemption for additional battery weight in applying restrictions to the driving of light goods vehicles

    Currently, drivers who acquired a category B licence before 1 January 1997 are permitted to drive vehicles between 3.5 and 7.5 tonnes. But drivers who acquired their licence after 1 January 1997 are required to hold a category C1 licence to drive vehicles between 3.5 and 7.5 tonnes.

    Modec's van has a Gross Vehicle Weight (GVW) of 5.5 tonnes compared to a class maximum of 3.5 tonnes for Light Goods Vehicles with a payload of up to 2 tonnes. The difference in GVW is largely accounted for by the weight of batteries (which can be in excess of one tonne) and their supporting structure.

    If an exemption was applied for the battery weight and concurrent supporting structure, Modec's van would be treated the same as vans of a similar class, saving drivers under the age of 29 from the need to secure an additional licence.

    (v)  Allow zero emission vehicles to use bus lanes

    The purpose of bus lanes is to improve air quality and lower carbon emissions by encouraging the public to use public transport. Modec would suggest that zero emission vehicles should be allowed to use bus lanes as they are in some Scandinavian countries. We understand that this would be a powerful but essentially temporary concession as hopefully the number of zero emission vehicles would grow and might use up bus lane capacity. However, at least for the short term, this would be an immensely powerful signal.

  5.3  Overall, Modec hopes that the Environment Audit Committee will urge the Government to focus on immediate measures that will help increase the take-up of low or zero carbon emission vehicles. These measures should be technologically neutral, based on outcomes, consistent with the DfT's commitment that "grants will be revised to incentivise the cleanest cars regardless of the technology or fuel type."[57]

  Whether the funding and organisations involved in the Powering Future Vehicles strategy is adequate

  6.1  Modec welcomes the funding and grants available though the TransportEnergy programme of the Energy Savings Trust. Modec's predecessor, the e-Mercury project, received a grant of £693,000 from the Energy Saving Trust to help with the research and development of the van.

  6.2  For example, we are pleased that grants of 40% of eligible costs are currently available for electric recharging points under the Refuelling and Recharging Infrastructure Programme. However, these grants are only available if the recharging points are available for public use. This might make sense for the gas and hydrogen refueling points it appears to be directed at. However for health and safety reasons it would not be appropriate to mandate public access to electric recharging points that are necessarily (due to the nature of the process and the time it takes) located within the facilities of electric vehicle operators.

  6.3  However, as noted above, Modec is disappointed at the complete closure of the PowerShift programme. If as the DfT pledges in its Annual Report it wishes to incentivise the cleanest cars regardless of the technology or fuel type, a grant programme for truly zero emission vehicles should be a fundamental element of the Powering Future Vehicles strategy.

  6.4 Modec is also concerned that the Low Carbon Vehicle Partnership (LowCVP) may miss opportunities to ensure that all technologies to deliver zero or low carbon emissions are properly promoted. For example, the commercial vehicles working group only addresses carbon emissions from heavy goods vehicles. Innovation could be stifled and environmental benefits missed, if the LowCVP follows too narrow a remit and is dominated by the views of existing major manufacturers.

43   Based on an average van covering 15,000 miles each year; compared to a diesel 3.5 tonne Gross Vehicle Weight van emitting around 220g of CO2 per Km. Back

44   The Fuel Efficiency Target is 100g/km CO2 Powering Future Vehicles Strategy: Third Annual Report, p 3 paragraph 2.1. Back

45   Powering Future Vehicles Strategy: Second Annual Report, p 12, paragraph 2.12. Back

46   Energy Saving Trust (2006) Frequently Asked Questions*h&p_lva=&p_sp=cF9zcmNoPTEmcF9zb3J0X2 J5PSZwX2dyaWRzb3J0PSZwX3Jvd19jbnQ9OCZwX3Byb2RzPTAmcF9jYXRzPTAmcF9wdj0mcF9jdj0mcF9wYWdlPTE mcF9zZWFyY2hfdGV4dD1iYXR0ZXJ5&p-li=&p-topview=1 Back

47   "Powering future vehicles strategy" (2002) p 4, paragraph 1.6. Back

48   "Powering future vehicles strategy" (2002) p 4, paragraph 1.9. Back

49   "Powering future vehicles strategy" (2002) p 2.  Back

50   "The Air Quality Strategy" (2000) p 3. Back

51   "Future Vehicle Emission Standards-2010 and beyond" (February 2004) p3  Back

52   Please see Annex for fuller comment on the differing benefits of battery, hybrid and fuel cell vehicles.
Department for Transport Annual Report (2005) p 102, paragraph 9.8. 

53   "Efficiency of Hydrogen Fuel Cell, diesel-SOFC-hybrid and battery electric vehicles," Dr Ulf Bossel, 20 October 2003. Back

54 Back

55 Back

56   Department for Transport Annual Report (2005) p 106, paragraph 9.26. Back

57   ?????????????. Back

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