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Coalition shows green light to green car incentive

30 July 2010

Somewhat hamstrung by its obligation to cut expenditure from every public quarter, the coalition government has nonetheless honoured a commitment made by the previous administration to offer financial incentives to purchasers of ultra-low carbon vehicles. Transport Secretary Philip Hammond confirmed last Wednesday that motorists will receive up to £5,000 towards these purchases from January 2011. His announcement came ahead of the Autumn spending review – in itself an indication of the pressure that key elements of the private sector are determined to maintain in their bid for support funding.

The news is obviously good for those intending to ‘go electric’ but it must also come as a relief to the electric vehicle manufacturing sector and its investors who need to take long term decisions now on where the markets for ultra-low carbon vehicles are ultimately to be found, and where future production infrastructure is to be located. The consumer grant will reduce the up-front cost of eligible vehicles by 25 per cent, capped at £5,000; it will be available across the UK and be open to both private and business fleet buyers.

Since the change of government earlier this year and the cost-cutting policies that have dominated the headlines, there has been considerable uncertainty as to the coalition’s position with respect to environmental matters, particularly on climate change and renewables. Philip Hammond says the coalition government is “absolutely committed” to low carbon growth, tackling climate change and making our energy supply more secure. “We are sending a clear signal that Britain is open for business and that we are committed to greening our economy,” he says, adding that by granting the incentive, the message is sent that the UK will remain a world leader in low emission vehicles.

However, this incentive is not imparted across the board and in perpetuity. The number of grants has been slashed and what money is available is likely to have been ring fenced from savings made in other areas of the economy; a matter of robbing Peter to pay Paul. Mr Hammond says the level of the incentive will be regularly reviewed to ensure that the UK remains competitive and taxpayers get value for money; clearly, incentives, like investments, can go down as well as up. The first review will be in January 2012 when the level will be set for subsequent years, based upon prevailing vehicle costs and how the market for electric vehicles in the UK progresses.

These caveats and restrictions notwithstanding, online green car guide, welcomed the news that the subsidy is to go ahead after all. Website editor, Faye Sunderland said the fund was a very important part of the move towards low carbon transport, and saw it as essential support for the electric car market, which will help push the industry forward beyond a "gas-guzzling past".

“These grants will make a real difference to consumers and will allow motorists to make, what to them remains, a seismic shift in their mode of transport. It is great news that even in these times of financial austerity, the government is showing confidence in the role that electric cars can play in reducing transport-related pollution and it is this confidence that will influence car buyers,” she adds.

Nissan, whose Sunderland plant has been described as the future heart of electric vehicle manufacture in the UK, not surprisingly welcomes Mr Hammond’s announcement. The company said that consumer incentives will bring electric vehicle ownership within reach of UK motorists and make cars like its ‘Leading, Environmentally Friendly, Affordable, Family Car’, or LEAF for short, a more financially viable alternative to conventional petrol and diesel-powered cars.

The news was also greeted with considerable enthusiasm by Renault UK’s new managing director, Thierry Sybord, who believes that with this financial incentive in place, affordability and lower running costs will make the financial argument for electric versus conventional fossil-fuelled vehicles, as compelling as their environmental one.

Vehicle pricing is one thing; the availability of low carbon refuelling stations is quite another. While our friends in Europe and North America forge ahead with their respective hydrogen/natural gas refuelling and electric charging infrastructures, here in the UK we appear to be nibbling away at it, preferring to ‘test the water’ with demonstration schemes rather than going ahead with full-scale infrastructure projects. As ever, money, or rather the lack of it, is the nub of the problem.

A scheme run by the Office for Low Emission Vehicles has been running for three years now and has so far funded just 77 electric vehicle stations (including 82 charging points), five natural gas stations and 20 bio-ethanol stations. Compare that with the number of conventional fuelling stations around the UK, which stands at around 9,000 at present. The current funding round – amounting to £660,000 (granted on a 50% match-funded basis) – will see an additional eight electric and five gas stations installed. Not a substantial sum when you start to look at the money the industry is prepared to plough into low-carbon vehicle development.

Meanwhile, the SMMT reports average new car CO2 emissions down 4.7% in the first half of 2010, to 145.2g/km, compared with the same period in 2009. Registrations of alternatively fuelled cars also doubled over this period. SMMT chief executive, Paul Everitt says this is down to continued vehicle manufacturer efforts to improve fuel efficiency and cut emissions.  While it was a better than anticipated first half of 2010, the remainder of the year is set to be challenging, particularly as we are now in the post scrappage scheme era.

For the time being, it seems we must rely on a combination of increasingly efficient engine development and financially supported alternative technologies to see our way towards those elusive emissions abatement goals.

Les Hunt

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