Transport Committee - Plug-in vehicles, plugged in policy?Joint written evidence from the RAC Foundation and RAC

This is a joint response from the Royal Automobile Club Foundation for Motoring (“RAC Foundation”) and RAC.

The RAC Foundation is a transport policy and research organisation which explores the economic, mobility, safety and environmental issues relating to roads and their users. The Foundation publishes independent and authoritative research with which it promotes informed debate and advocates policy in the interest of the responsible motorist.

RAC is one of the UK’s oldest and most progressive motoring organisations with over seven million members. The business delivers motoring services, including roadside assistance, insurance, vehicle inspections, legal services and traffic and travel information, to both individual members and on behalf of corporate partners. RAC endeavours to champion the interests of responsible motorists and regularly surveys their views to inform policy. RAC is wholly owned by the Carlyle Group, one of the world’s largest private equity asset managers.

Although sharing a common heritage, the RAC Foundation and RAC are separate entities. However, both organisations share a common interest in low-carbon vehicles and both are sponsors of the RAC Future Car Challenge, an eco-rally that showcases the latest low-carbon vehicles in a competition to use the least amount of energy for the route from Brighton to London.

Summary of Main Points

The RAC Foundation and RAC fully support efforts to decarbonise road transport through the promotion of low-carbon vehicles, in order to meet the government’s greenhouse gas (GHG) reduction targets set out in the Climate Change Act 2008 and subsequent Carbon Budgets.

There is no single solution to the challenge of decarbonising road transport. Different power train technologies (eg pure-electric, plug-in hybrid, hybrid, biofuel, highly optimised internal-combustion engines) will be used in different applications, where they are most suited. Plug-in vehicles will be part of the solution.

The government should “set the rules of the game” through a long-term policy framework and leave it up to the market to decide which technology to choose in each application. It should not put all its eggs into one basket, eg plug-in vehicles only.

In the short to medium term, (highly optimised) internal-combustion engine vehicles are likely to remain the dominant form of power train because barriers to plug-in vehicles (most notably battery costs and range) will limit these vehicles to niche markets.

Surveys carried out by the RAC indicate that the current generation of plug-in vehicles is unattractive to financially stretched motorists, mainly due to limited performance characteristics (range) and high purchase costs.

The gradual electrification of vehicles will increase the need to move towards a life cycle emissions metric to account for and compare the real environmental impact of vehicles.

The improvement of local air quality is an often ignored benefit of plug-in vehicles.

1. The contribution of plug-in vehicles to decarbonising transport

1.1 In the short to medium term (up to c.2030), plug-in vehicles (currently several thousand) are unlikely to make a substantial contribution to GHG reductions because their numbers relative to the entire car park (currently 28.5 million) are likely to remain low, mainly due to high battery costs and performance limitations.

1.2 The limited contribution is also due the fact that the applications in which plug-in vehicles are likely to be used (ie the type of trips they will make/replace) are shorter ones (eg urban or suburban), which means that the vast majority of vehicle miles travelled will be made by conventional combustion engine vehicles.

1.3 The Committee on Climate Change estimates that 1.7 million plug-in vehicles will be needed by 2020 to meet the Carbon Budget. This is extremely ambitious, as it would require sales of over 200,000 plug-in vehicles every year until 2020—c.10% of new car sales. This would require a technological breakthrough in battery technology or huge financial incentives for consumers, neither of which are guaranteed or indeed (politically) acceptable.

1.4 In the longer term (from c.2030s), as battery costs and performance limitations are expected to decrease, plug-in vehicles will increase in number and make a greater contribution to GHG reductions. To meet the 2050 GHG reduction target, all vehicles from the early 2040s (because of vehicles’ lifespan) will have to be virtually zero carbon, which, in effect, limits the options to plug-in or hydrogen vehicles.

1.5 Much depends on the “grid carbon intensity”, ie the emissions associated with producing a unit of electricity, which currently fluctuate between 450 and 550 gCO₂e/kWh. In order to maximise plug-in vehicles’ contribution to GHG reductions, the grid will have to be decarbonised to virtually zero, which requires significant investment into low-carbon sources (ie renewables and/or nuclear).1 As other sectors of the economy are electrified (eg rail and heating homes), there will be increased competition for finite, low-carbon electricity.

1.6 There is a strong need to move away from the “tailpipe” (ie exhaust emissions) metric, which currently serves as the basis for policy and regulation, towards a life cycle metric to make better informed decisions which reflect the true environmental impact of vehicles.

2. Uptake of plug-in vehicles and how this can be improved

2.1 When compared to the overall car park and new car sales, the market take-up of plug-in vehicles is slow. This is mainly because of: (1) high vehicle purchase prices and concerns over residual value due to uncertainties associated with battery technology; (2) limited range/range anxiety; (3) difficulty/inconvenience of recharging; (4) limited choice of models; (5) supply constraints; and other concerns, eg regarding safety and reliability.

2.2 Overcoming these barriers will require a mix of long-term government policies and technological advances:

(1)High vehicle purchase prices and residual value: in its first progress report to Parliament, the Committee on Climate Change stated that stronger incentives might be needed in the early years, eg £10,000 for the first 25,000 vehicles sold, and that cumulative support will have to be significantly higher than the £230 million already committed by the government. While the evidence would support this, even stronger financial incentives would be difficult to justify politically. Technological advances and increasing economies of scale will bring down the price of plug-in vehicles, although the extent and speed of this is unclear. A more promising way to overcome this barrier is for vehicle manufacturers to offer battery leasing models which decreases the purchase price significantly and removes concerns over residual value.

(2)Limited range/range anxiety: this will mainly be achieved through technological advances in battery technology, and the roll-out of appropriate charging infrastructure (eg on-street rapid charging, off-street slow charging in residential areas). In theory, battery swapping is also an option, but the need for battery system and mounting standardisation and logistical issues are unlikely to make this a viable option in the UK for the foreseeable future. Evidence from the Technology Strategy Board’s ultra-low-carbon vehicle trials suggests, however, that once users experience plug-in vehicles, range anxiety decreases markedly.

(3)Difficulty/inconvenience of recharging: charging must be made as easy as possible, and will require the roll-out of charging infrastructure for people without off-street parking facilities.

(4)Limited choice of models: this barrier will slowly be overcome as new models enter the market place in the next couple of years.

(5)Supply constraints: these will be overcome, as demand gradually increases and vehicle manufacturers increase low-volume production.

2.3 Incentives for and investment in plug-in vehicles must not come at the expense of other low-carbon power train technologies, many of which are available now, such as non-plug-in hybrids and other alternative fuels such as natural gas, which are well suited for certain applications (eg heavy goods vehicles). The ultimate aim must be for the plug-in vehicle market to carry and sustain itself, as the government cannot and should not provide incentives indefinitely.

2.4 It is important to stress that introducing disruptive technologies to the mass market is a long-term and gradual process.

3. The effectiveness of the Plugged-in Places scheme

3.1 The main achievement of the Plugged-in Places (PiP) scheme was to stimulate and encourage activity to promote plug-in vehicles at the local level by bringing together a range of actors: local authorities, energy and utility companies, transport operators, and so on. The scheme has set in motion the roll-out of charging infrastructure in key potential markets across the UK.

3.2 As noted above, installing charging points is an important way to overcome slow uptake of plug-in vehicles, mainly because they enable people without (easy) access to charging facilities to recharge their vehicles, but also because they give people psychological reassurance.

3.3 However, installing charging points, even for PiP regions, is not a straightforward process: it is expensive and potentially a lengthy process due to planning laws.

3.4 There is a need to incentivise night-time (ie off-peak) charging at home to spread the load on the electricity network and maximise CO₂ reductions; this will also be advantageous to consumers who can benefit from cheaper electricity at night.

3.5 On-street rapid and/or quick charging points are likely to be needed to make charging in public spaces a realistic option for plug-in vehicle users; these are, however, expensive to install and in many cases will require reinforcements to the local grid.

3.6 Local authorities can make use of a host of policies to encourage plug-in (and other low-carbon) vehicles, other than merely installing charging points: parking policy, Low Emission Zones, road pricing, access to bus only lanes—the RAC Foundation has published a report outlining these powers, including a survey showing the “appetite” among local authorities for using them.2 The report showed that more of these powers could be used in practice.

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

4.1 Plug-in vehicles are not the panacea to the decarbonisation challenge in transport, certainly in the short to medium term; they are one part of the solution.

4.2 As noted above, however, in the long term, there are only few options as vehicles will have to have zero emissions, from the tailpipe at the very least. This leaves all-electric vehicles, hydrogen fuel cell vehicles (or hydrogen internal-combustion engine vehicles) or internal-combustion engine vehicles fuelled by second or third generation biofuels.

4.3 The RAC Foundation has published a report which maps out the pros and cons of the different options to decarbonise power trains:3

(1)Internal-combustion engine (ICE) vehicles: ICE vehicles will remain the dominant form of power train for the foreseeable future. European legislation will force vehicle emissions per kilometre to come down. The main options for decarbonisation include downsizing and turbo-charging, and weight reduction. Many vehicles are becoming/have become heavier, however, mainly due to people’s preferences (and to a lesser extent safety requirements).

(2)Hybrids: micro/stop-start, mild and full hybrids are all readily available and proven technologies which can achieve significant fuel and GHG savings. By the 2020s, almost all vehicles are likely to feature some form of electrification/hybridisation.

(3)Biofuels: European legislation requires that by 2020, 10% of transport energy demand comes from renewable energy and 6% of fossil fuels to be effectively biofuel. There are, however, sustainability (indirect land-use change) and social concerns (“food vs fuel”), especially in relation to first generation biofuels, which need to be fully addressed. Furthermore, there will be competition for limited biofuel supplies from other sectors, particularly aviation, where there are fewer or no alternatives to the use of liquid fuels.

(4)Natural gas: this is an often ignored fuel, but one that is well suited for certain applications, eg heavy vehicles with central refuelling possibilities, at depots for example.

(5)Hydrogen: although hydrogen is a potentially zero-carbon fuel at the tailpipe, hydrogen fuel cell vehicles are likely to be only a longer term mass market solution because vehicle costs are still high, it is very expensive to roll out the necessary refuelling infrastructure, and it is energy-intensive to produce hydrogen in mass market volumes.

4.4 It is important to note that there are many cross-benefits that will apply to all power trains: weight reduction, engine downsizing (for all vehicles that use an ICE), advances in battery technology (hybrids, plug-in hybrids and all-electric vehicles), low rolling resistance tyres, and improved aerodynamics.

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

5.1 Most countries in the EU have engaged in a programme to encourage the take-up of plug-in vehicles: for example, Spain and France have invested heavily in rolling out charging infrastructure. The French government has also procured a large number of electric vehicles with a view to stimulating market demand.

5.2 An RAC Foundation summarises what EU member states are doing to encourage low-carbon and plug-in vehicles.4 One interesting example is the French “feebate” system: feebate schemes combine an integrated system of registration fees for the most polluting vehicles with rebates for cars with the lowest emissions. Such systems are financially self-sustaining for the government because the fees collected from the most polluting vehicles pay for the rebates for the least polluting vehicles. The evidence suggests that this system has enabled emissions reductions in France of twice the European average.

5.3 Countries such as Israel, Denmark, Japan and Australia are working with “Better Place”, a company that has developed a battery swapping system designed to make recharging faster and easier for plug-in vehicle users. The advantages of such a system are that it removes range anxiety and the inconvenience of long recharging times, and that it removes the need for charging points and parking spaces dedicated for charging. The disadvantages are that it is: costly to roll out; requires standardisation of batteries and battery mounting systems, which is difficult to agree as manufacturers will not want to give up their own systems; gives rise to a host of logistical issues, namely having to store large numbers of different types of batteries in different locations.

April 2012