Decarbonising Transport: paving the road for Electric and Hydrogen powered Vehicles?

On 26 March 2020 the Department for Transport (“DfT”) published the “Decarbonising transport: setting the challenge” (the “Report”), a policy paper which sets out the UK Government’s plan to develop a Transport Decarbonisation Plan. The Transport Decarbonisation Plan will set out in detail what Government, business and society will need to do across all modes of transport to put the UK on a path to achieving its net zero emissions goals across all modes of transport by 2050.

The Transport Decarbonisation Plan is due to be published ahead of the 2020 United Nations Climate Change Conference (COP26) in November 2020, which has since been postponed to 2021. It is unclear whether this change in COP26 timetable will impact publication of the Transport Decarbonisation Plan also.

In summary, while this is not a consultation, DfT intends the Report to be the start of a broader policy engagement by the department about decarbonising the mobility sector whilst maximising the potential in each transport mode to deliver UK’s carbon reduction aims. Therefore this Report is a signal of the government’s current thinking in developing its policies in this area. As the transport sector covers a plethora of issues, more coordination is needed across the department as well as with other government departments and stakeholders. Nonetheless, while the Report acknowledges that, together with further technological developments, the choices we make at individual and societal level will impact policy development, the Report highlights the technologies, fuel types and consumer behaviours the Government is focusing on at present, thus providing guidance on which may develop ahead of others in the drive to achieve net zero.

The Report provides a broad outline of how DfT intends to structure its work over the coming months, and how it intends to take account of the challenges currently faced by the Government to deliver the desired reduction in transport emissions. The core areas identified are:

This update considers DfT’s proposals in relation to the decarbonisation of road vehicles, reducing carbon in a global economy and what role electric vehicles (“EVs”) and hydrogen powered transport will play in DfT’s net zero ambitions.

Aims for passenger vehicles

While acknowledging the importance that behavioural change will play in the decarbonisation of transport, DfT restates the Government’s ambition to bring forward the end of the sale of new petrol and diesel vehicles from 2040 to 2035 or earlier (including, if feasible, phasing out of hybrid engine vehicles). The consultation on bringing forward this target is expected to conclude in the summer of 2020.

The Report also sets out separate aims, targets and policies for reducing emissions involved in moving people by buses and coaches, passenger rail, aviation and cycling and walking.

Current policies to deliver the net zero targets

The Report summarises current policies in place to deliver the net zero targets in the transport sector, as well as outlines the planned future work that will be needed to meet UK’s climate change targets. Broadly these can be grouped as follows:

EVs:

• The 2020 Budget included the announcement that the Office for Low Emissions Vehicles will complete a comprehensive EV infrastructure review.
• There are a range of incentives available to support the update of EVs, including tax benefits, direct grants and other financial support. The 2020 Budget included £532 million of funding to keep the Plug in Vehicle Grants in place up to 2023.
• The Report also refers to the extension (to 2025) in the benefit in kind rates for zero emission vehicles: as of 6 April 2020, drivers of clean cars will be eligible to pay no benefit-in-kind tax, in contrast to the current rate of 16%.

EV charge points:

• £2.5 billion of grant funding is to be made available for plug in cars, taxis and motorcycles, as well as funding to support charge point infrastructure at homes, workplaces, on residential streets and across the wider roads network.
• £500 million of funding is to be provided over the next five years to support the rollout of a fast-charging network for EVs, which seeks to ensure that drivers will never be further than 30 miles from a rapid charging station. This will include a Rapid Charging Fund to help businesses with the cost of connecting fast charge points to the electricity grid.
• The first tranche of the £400 million public-private Charging Infrastructure Investment Fund (designed to stimulate private investment in public charge points) is expected by DfT to see 3,000 new rapid charge points installed across the UK by 2024.
• In January 2020, the Government increased the value of the Onstreet Residential Charging Scheme from £5 million for 2019-2020 to £10 million for 2020-2021 to support further roll out of charging points.

Heavy Duty Vehicles (HDVs):

• The new HDV CO2 emission standards regulation came into effect in July 2019. This establishes for the first time CO2 reduction targets for HDV manufacturers, requiring reductions of 15% for 2025 and 30% for 2030 against a 2019 baseline.

Emissions reductions:

• Regulation to reduce tailpipe emissions for new cars and vans remains a crucial lever. As committed to in the Road to Zero Strategy, the UK will maintain the current (EU-led) arrangements for vehicle emissions regulation.
• From 1 January 2020, the CO2 emission reductions regulations have set targets to 2030 which apply for new cars and require emissions reductions of 15% by 2025 and 37.5% by 2030 (based on a 2021 baseline).

Planned coordination for data and EV charge points

DfT has identified improving the consumer offer for charging infrastructure as priority area; for example by ensuring that all new rapid and higher power charge points provide for debit or credit card payment by Spring 2020, and expecting industry to develop a roaming solution across the charging network (which would allow EV drivers to use any public charge point through a single payment method). At present the variety of payment methods has been noted as a source of frustration for EV drivers, so the Government wants to ensure that there are easy payment methods available to improve EV drivers’ experiences and give EV drivers more choices.

DfT note that they are also working to make charge point data freely available so that software developers can develop tools for drivers to easily locate and access available charge points. The Government may use its powers under the Automated and Electric Vehicles Act 2018 to facilitate this in the event where it feels that the market is too slow to deliver these improvements across the network. Under this Act, the Government can require operators of public charging or refuelling points to make available prescribed information relating to such points.

DfT also intends to publish the Government’s response to its consultations on charge points in new homes, smart requirements for private charge points and on the introduction of green number plates to raise public awareness of low-carbon vehicles. Finally, the Government plans to publish in Spring 2020 its vision for a core network of rapid/high powered charge points along England’s key network of roads.

The Report also recognises the need for a different approach in reducing greenhouse gas emissions in the goods and services transport sector, namely for heavy goods vehicles, vans, rail freight and maritime transport.

Fuelling decarbonised transport

While batteries (primarily lithium-ion batteries) are seen as a viable technology for passenger vehicles, the fuel for delivering a solution for larger road, marine and rail vehicles requires further consideration. In this hydrogen is seen as a potential solution especially given that the UK has a number of world leading centres that could readily test the viability of the hydrogen economy for transport. Hydrogen is seen as key especially in the rail and rail freight sectors.

By way of example of work in this space, the Report notes Network Rail’s cross-industry Traction Decarbonisation Network Strategy which will consider where overhead electrification, battery or hydrogen trains will be most effectively deployed. This is due to be completed during 2020.

DfT does recognise however that the challenge for rail freight is that current alternatives to overhead electrification, such as hydrogen or battery, do not have sufficient power to pull heavy freight trains, although there is potential for bi-modes to reduce emissions.

Cross-modal decarbonisation actions: Government support for regional solutions

The Report sets out certain decarbonisation actions which apply across various modes of transport, such as low carbon fuels (in which sustainable fuels such as bioethanol and diesel are blended with petrol and diesel) and Government support for regional solutions, such as the Transforming Cities Fund (a £2.5 billion fund to combat congestion and drive productivity through low carbon transport infrastructure investment), Clean Air Zones (a measure being implemented to improve air quality in towns and cities across England) and Future Transport Zones (four zones created with £90 million of funding from Budget 2018, as demonstrators of new mobility services, modes and models).

Next steps and concluding comments

DfT holds up the Report as marking the beginning of a conversation to develop the policies needed to decarbonise transport. In setting these policies, DfT states that it will take a holistic view of transport, looking at challenging new cross-modal approaches to mobility whilst maximising the potential in each mode to delivery their carbon budgets and achieve net zero.

The Report reflects a more consolidated approach in DfT across a number of policy initiatives and while more coordination is needed across the policy landscape (notably with BEIS and Treasury) to demonstrate practical commitment to net zero, this Report will be welcomed by many in the transport and energy sectors.

However, the Report does aim to provide (at least at this stage) sufficient direction on how some of the challenges faced by the industry and Government on the path to meet UK’s net zero targets will be resolved. The Report acknowledges that there is considerable uncertainty over how far and fast transport emissions will fall in the future, as the projection depends on how quickly technology evolves, how quickly consumers adopt these new technologies as well as how individual travel behaviour changes over the coming decades. Yet at times of uncertainty, it is policy clarity that will be key in helping drive the behaviours and investments the Government seeks.

What is more, as identified by some commenters on the Report, the ongoing COVID-19 pandemic has provided an unusual opportunity to preview what the result of a decarbonised transport system could look like. It remains to be seen whether this period will trigger wider public interest in decarbonising transport and persuade the Government to be more ambitious in its policy development.