Transport Committee - Plug-in vehicles, plugged in policy?Written evidence from WWF-UK

1. This written submission is on behalf of WWF-UK in response to the Transport Committee’s Call for Evidence on Low Carbon Vehicles, announced on 16 March 2012.

2. WWF is the world’s largest independent conservation organisation. Low carbon transport is an important issue for WWF because it is urgently needed to reduce emissions from conventional petrol/diesel cars and decrease our reliance on oil. As the biggest consumer of petroleum products, transport is a significant source of emissions leading to climate change, which is a major threat to people and nature.

Summary of Main Points

3. WWF believes that plug-in vehicles (defined here as EVs) have a significant role to play in decarbonising transport but only if powered by decarbonised electricity and if they do not lead to increased driving.

4. The current uptake of plug-in vehicles is proceeding too slowly to make a significant impact on decarbonising transport. A variety of policy measures are urgently needed, including more infrastructure, alternative ownership models, financial incentives and consumer education, to ensure a rapid uptake of EVs over the next 20 years.

5. A focus on low carbon vehicles must not be at the expense of greater support for public transportation and active modes of travel, such as cycling and walking.

6. The UK compares favourably to other countries in terms of providing financial incentives for purchasing EVs but not in terms of providing charging infrastructure.

The Contribution of Plug-in Vehicles to Decarbonising Transport

7. WWF-UK recently published a report1 showing that electric vehicles (EVs) have an important role to play in decarbonising road transport and reducing the UK’s dependency on oil. They will also be essential in delivering the level of reduction in emissions from cars necessary to achieve the 80% reduction target by 2050 required under the UK Climate Change Act.

8. The Committee on Climate Change’s (CCC) figures suggest that car emissions need to fall by 26% to be in line with the UK carbon reduction target of 34% by 2020. If the CCC’s “intended” carbon reduction target of 42% by 2020 is used, car emissions would need to be cut by 32% by 2020 and 51% by 2030 to be in line with this higher target.2

9. WWF-UK supports the rapid introduction of EVs to replace petrol/diesel vehicles. However, our analysis shows that EVs will not contribute significantly to transport decarbonisation until after 2020. Until then, reducing average emissions from conventional cars and limiting (or eliminating) increases in demand for car travel, are the most important factors in decarbonising transport. By 2030, the full value of EVs to a low-carbon economy will depend on decarbonising the power sector, by increasing our use of renewable energy, and reducing the amount we drive.

10. The scale of the contribution that EVs can make to a low-carbon transport sector depends on the carbon intensity of the electricity that powers them. Our report shows that, at high levels of EV uptake, decarbonisation of the grid reduces car emissions by approximately 70% more than if the grid is powered by fossil fuels as it is currently.3

11. Driving EVs less, not more, than conventional cars will be a challenge as they cost less to operate. If EVs contribute to a rise in car kilometres, we’ll need far more of them to achieve the same result as driving less in terms of reducing fuel demand and car emissions.

12. A combination of high EV uptake, improvements in the efficiency of internal combustion engine vehicles (ICEVs), and demand management measures to reduce the amount people drive could potentially deliver a 75% reduction in car emissions by 2030, well in excess of the CCC’s recommendations. Under these circumstances, EVs alone could provide nearly a third of the total reduction in car emissions.

13. This same combination of factors could also reduce UK fuel demand for cars by nearly 80% by 2030. EVs alone could account for nearly a third of this potential reduction in UK fuel demand, representing over £5 billion a year in avoided oil imports by 2030.

Uptake of Plug-in Vehicles and how this can be Improved

14. The current uptake of electric vehicles (EVs) and plug in hybrid electric vehicles (PHEVs) is progressing too slowly to make the necessary impact on the greenhouse gas emissions from the transport sector. In 2011 only 2,500 out of 28 million cars in the UK were electric. By 2020 we need to have a minimum of 1.7 million electric vehicles on the roads of the UK. The barriers to greater EV up take are well understood4 but they now need to be the focus of concerted policy effort to reduce them and accelerate the market. Current efforts to support EV uptake are driven by the combination of the Plug in car grant and the Plugged in Places programme and while both are welcome they are not on their own sufficient to trigger the change in EV sales.

15. A range of policy measures are available to the UK Government covering:

Infrastructure provision;

Alternative ownership models;

Fiscal measures to reduce relative purchase price;

Fiscal measures to reduce running costs; and

Awareness, information and training measures.

16. Work commissioned by WWF Scotland from Atkins consultants identified over 35 possible interventions designed to overcome the barriers to EV sales. These measures range from; identifying the preferred market model for EV infrastructure, incentives for workplace charging, scrappage schemes for EVs, introducing an EV feebate scheme and introducing road charging & low emissions zones. An obvious and important place for the public sector to show leadership is in the replacement of their current petrol/diesel car fleets to all electric fleets. If this is matched by steps to secure similar replacement rates in appropriate corporate fleets public awareness and support for EVs could increase significantly.

17. Some example measures are described below; these are not necessarily priority measures but are highlighted to illustrate the range of available options. Full details of each of these suggested measures and many more are given in the report Electric Vehicles: Driving the change. The full report assesses the relative impact of each measure against the most significant barriers and ranks them accordingly:

Eg Government action to agree a market model for recharging infrastructure

18. Potential measure: UK Government commissions a review of the possible market models for recharging infrastructure and implements the recommendations of the review. This would involve working with relevant stakeholders to identify key roles and responsibilities for energy providers, electricity retailers, EV manufacturers, private infrastructure providers and the public sector; specify pricing and payment approaches; and agree customer interface requirements (single or multiple points of contact).

Eurelectric identify four possible market models for consideration:

an integrated infrastructure model—This involves integrating the recharging infrastructure into the national asset base with current electricity providers offering tariff systems common to the whole system, with different rates for slow and fast recharging;

a separated infrastructure model—A new role of recharging infrastructure operator is created to own and operate recharging infrastructure, purchasing electricity from suppliers before selling it onto the customer;

independent e-mobility provider—A new role of e-mobility provider is created to install a proprietary network of EV recharging sockets, conforming to agreed standards, and providing electricity bundled with other services, including recharging; and

spot operators—Recharging points and the selling of electricity are conducted by the parking spot owner or operator.

Eg Car club schemes

19. Potential measure: Local authorities work with existing car club operators to introduce EVs into fleets and introduce EV-based car clubs in other cities. This would involve local authorities:

(a)using car clubs instead of purchasing their own fleet cars—to strengthen the business case for car clubs to purchase EVs;

(b)procuring vehicles directly for car clubs using their considerable purchasing power to lever favourable purchase prices or lease contracts; and

(c)working with manufacturers to set up a publicly funded electric car share scheme, similar to the Paris Autolib project.

20. Usage patterns of car club vehicles, consisting of predominantly short trips, make EVs a practical option for car clubs. Car clubs can also involve partnerships with medium to long distance mass transit providers (coach rail operators) to enable public transport to be used for the main leg of the journey, and an EV to be used for the first or last few kilometres which are generally unreachable by public transport. For example, the Swiss Railways’ partnership with Mobility Car Sharing, called “Click and Drive” gives members access to 800 vehicles located at 350 railway stations around Switzerland. This approach addresses range limitation concerns associated with EV ownership and also tackles the limitations associated with public transport use.

21. An EV-based car club would have positive wider sustainable transport impacts, by encouraging the right mode for the right journey; and positive social inclusion impacts by making EVs accessible to all.

Eg Scrappage schemes designed to increase sales of EVs

22. Potential measure: UK Government introduces a scrappage scheme to encourage consumers to purchase EVs, with subsidies reducing as EV uptake increases.

23. Scrappage schemes currently exist in Italy and Czech Republic to encourage consumers to purchase low carbon vehicles; while the UK Government ran a vehicle discount or “scrappage” scheme for all types of car from May 2009 to March 2010, to provide a boost to demand and immediate support on a short-term basis to the car industry and its supply chain in the wake of falling sales.

24. The scheme would involve offering drivers a subsidy if they trade in a conventional car or van which is at least 10 years old, and purchase an EV instead. A scrappage scheme would encourage consumers to exchange a conventional vehicle for an EV; rather than encouraging consumers to consider purchasing a second or third vehicle (which is a risk with purchase grants).

Eg Registration tax feebate scheme

25. Potential measure: UK Government introduces a feebate scheme for the UK which involves increasing the tax levied on the purchase of relatively high-emitting vehicles and providing rebates for lower-emitting vehicles.

26. Feebates are a particular type of purchase tax incentive which involves levying fees (in the form of car registration tax and value added tax, for example) on relatively high-emitting vehicles and providing rebates for lower-emitting vehicles. Revenues from fees can be used to fund rebates, creating a revenue-neutral incentive programme.

27. This measure would involve applying the “first year rates” for Vehicle Excise Duty (VED) as a feebate scheme, and increasing the range of rates/rebate to give EV buyers a financial benefit of £2,000 to £5,000. This allows some of the price premium associated with EVs to be offset.

28. Lane (2011)5 suggests that there strong evidence pointing to the success of feebates in encouraging EV uptake, citing examples from various countries. For example, in the Netherlands the market share of Band A and B cars increased from 9.8% to 19.3% following the introduction of purchase incentives in 2001 (Gartner, 2005);6 in France the average CO₂ emissions of the new car fleet fell by 6%—almost twice the comparable figure for the EU—in the year following the introduction of a new feebate7 in 2008 (German and Meszler, 2010).8

Eg Public sector procurement of low carbon vehicles for own fleet

29. Potential measure: The UK Government, local authorities and other public sector organisations support an earlier than average switch to low carbon emissions vehicles for public sector fleet vehicles (cars and vans) through procurement policies, etc. This would involve:

30. the UK Government setting a target for 100% of public sector fleets to be electric, where appropriate;

31. the UK Government and local authorities ensuring that procurement policies require public sector organisations to purchase electric rather than convention vehicles, where practical to do so.

32. National and local governments wield significant purchasing power since they procure and operate large fleets of vehicles. Local authorities and other public sector organisations can support an earlier than average switch to low carbon emissions vehicles for public sector fleet vehicles (cars and vans) through use of financial incentives, procurement policies, etc. This approach provides a clear sign of Government support and belief in battery powered technology, and can provide much needed investment certainty for the private sector (and particularly manufacturers), who may.

33. In 2010, the French government announced that it will purchase 50,000 EVs for government fleet use over the next five years, significantly more than most governments have committed to. It has assembled a group of 20 corporations, utility companies and other large fleet owners to purchase all the EVs, most of which will come from Renault and Peugeot-Citroen.

Eg Increase the EU target for the emissions-intensity of new cars and vans

34. Potential measure: UK Government encourages the EU to increase the target for the emissions-intensity of new cars and vans produced by manufacturers.

35. This would encourage the major manufacturers to increase the volume of EVs produced. An emissions target was initially set in 1995 and was intended to reduce average new car emissions to 120 g/km by 2005. However, before it became legally-binding, the target was postponed or weakened four times (T&E, 2010). Manufacturers are well on their way to meeting the new target of 130 gCO₂/km by 2015, and 95 gCO₂/km by 2020, suggesting that a more stringent target would readily achievable. The current target is not sufficiently low enough to drive significant volume EV production, at the moment the target is predominantly incentivising efficiency improvements in petrol and diesel cars.

The role of plug-in vehicles alongside other technologies to reduce carbon emissions from road transport

36. Electrification of road transport will be the dominant transport system of the future; however it must be complemented by attractive alternatives to travel and greater support for demand management and walking and cycling. A reduction in the total car km driven each year in the UK is critical if the transport sector is to play its required role in contributing to our carbon budgets. Analysis by Element Energy for WWF Scotland showed the same emissions reduction would be achieved if Scotland either stabilised traffic levels at those of 2001 and replaced 300, 000 cars with EVs by 2020 or replaced 1.5 million cars and allow traffic kms to grow as predicted. Demand management is the forgotten component of a sustainable transport future and must be integral to any future EV strategy.

Action taken by other countries to encourage the uptake of plug-in vehicles

37. The UK’s policies and incentives for purchasing EVs are broadly comparable to those in many other countries.9 There are numerous approaches to stimulating EV uptake, however most have one element in common: the subsidy of the upfront capital cost of the vehicle. These subsidies can be through tax breaks (as in Denmark) or through a capital grant (as in the UK, France and the Netherlands). Germany is one exception, as the government has refused to subsidise the capital cost of EVs and is instead focusing funding on EV manufacturing, where it has allocated up to €500 million for R&D. A summary of electric vehicle subsidy and support policies for a selection of countries is shown below.

SUMMARY OF INTERNATIONAL SUPPORT POLICIES TO ENCOURAGE THE UPTAKE OF EVS

Country	Support polices
Belgium	Income tax reduction of 30% up to €8,990.
The Netherlands	Amsterdam city council provide a subsidy of up to €15,000 for electric cars (total programme cost of €3 million). Free parking in Amsterdam.
Denmark10	EVs exempt from vehicle registration tax (currently at either 108% or 180%).
France 11	€5,000 subsidy (grant) on EVs (until 2012). Currently ordering a public/private fleet of up to 50,000 EVs with the possibility of expansion to 100,000.
US	Tax credit of $2,500–$7,500 depending on battery capacity.
US—California12	Grant of up to $5,000. Discounted electricity for EV charging, reduced insurance, free parking. Allowed use of the high occupancy lane. Emission reduction counts towards employers’ emissions target.
Canada 13	CA$5,000–$8,500 government incentive (battery size dependent), Ontario up to CA$10,000, (up to 10,000 vehicles). Provincial sales tax (PVT) reduction of up to 50% on clean vehicles. Provincial rebates of up to CA$2,000. 20% reduction in insurance rates.
Japan14	Acquisition tax exemption up to 2.7% ~300,000Y ($3,300). Price wars between manufacturers. 50–75% reduction on tonnage tax.
China15	Trial programme in five cities subsidizing EVs at 60,000 Yuan ($8,800) and hybrids at up to 50,000 Yuan.

38. The policies outlined above relate only to subsidies and incentives to stimulate EV sales. This is only part of the stimulus for electric vehicles. In addition to incentivising EV sales, government-led programmes are also needed to increase EV charging infrastructure. The UK is still without a national charging infrastructure plan and is lagging behind other nations in encouraging infrastructure development. For example Japan has allocated government funding to deliver public charging points, whereas France is changing its planning policy to make the installation of EV charging points mandatory in all new buildings.

April 2012