Diesel’s share of the UK new car market is set to decline as fleets take a more “open-minded approach” to petrol-engined cars and demand for plug-in and hybrid models increases under pressure from potential tax changes and introduction of a network of Clean Air Zones in towns and cities nationwide.
Clear Air Zones are expected to be introduced by local authorities that have breached air quality standards and they are the central focus of the government’s long-awaited plans to reduce nitrogen dioxide (NO2) levels nationally.
The Clean Air Zones – around 80 local authorities have been identified by the government as having roads with concentrations of nitrogen dioxide forecasted at above legal levels – were the key plank in the Department for Environment, Food and Rural Affairs’ long-awaited Air Quality Plan published this month.
The government hopes that its proposals, which are out consultation to June 15 with the final Plan expected to be published by July 31, will reduce the impact of diesel vehicles, and accelerate the move to cleaner transport, notably plug-in vehicles. At that time it will also confirm the local authorities which will formally and legally be required to develop and implement comprehensive Clean Air Zone plans.
Simultaneously, the government announced in the Spring Budget, it would continue to explore the appropriate tax treatment for diesel vehicles with any changes announced in the Autumn 2017 Budget.
Additionally, the government has signalled that it wants public sector fleets to move away from operating diesel vehicles and has called on businesses to follow that lead highlighting corporate social responsibilities.
Furthermore, the government says it will consult separately on regulatory changes to support the uptake of alternatively fuelled (non-diesel) vans.
The government said: “Vans spend much of their time driving around our towns and cities and over 96% of them are diesel powered so there is a pressing need to support innovative new solutions.”
It suggests that one way of achieving that was to encourage the uptake of cleaner fuels in delivery vehicle fleets. Proposals include:
- Increasing the weight limit of alternatively-fuelled vans that can be driven on a category B driving licence in the UK
- Exempting certain alternatively-fuelled vans from goods vehicle operator licensing requirements in Britain
- Introducing roadworthiness testing for electric vans in Britain.
All those developments have led the consulting arm of motor industry date suppliers and forecasters CAP HPI to conclude in its new ‘Petrol versus Diesel’ report: “It is clear that the fleet market is concerned enough about future diesel values to reduce their exposure to them. As we start to see restrictions in the use of diesel vehicles in our cities, used buyers will become increasingly wary of the technology and this will impact residual values.
“As these disadvantages begin to outweigh the benefits of diesel vehicles – and the increasing awareness of total cost of ownership is already putting paid to this – we will start to see a vicious circle of declining used demand and declining residual values.”
With some fleets are opening up their ranges to petrol, the report continues: “With declining diesel residual values starting to become apparent, fleets are moving to balance their portfolios to reduce their exposure to falling diesel residuals. Similarly, there is an increased demand for low and zero-emission vehicles from businesses wanting to show themselves as environmentally aware.
“At the same time, end-users are also looking to shift away from diesel. With benefit-in-kind taxation on company cars planned to increase over the remainder of the decade, more and more company car user-choosers are looking at low and zero-emission alternatives, some of which offer a better deal for company car drivers.”
However, Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association, said: “Diesel vehicles remain a vital part of the fleet mix though, as diesel engines are the most energy-efficient internal combustion engines. It is often the most appropriate powertrain for long distance journeys and non-urban freight transportation, and the latest Euro6 diesel engines have made some major gains in reducing harmful NOx (nitrogen oxide) emissions.”
Five cities – Birmingham, Leeds, Nottingham, Derby and Southampton – are already required to introduce Clean Air Zones under the government’s 2015 UK Air Quality Plan. Additionally local authorities in Greater Manchester and in Bristol and South Gloucestershire have secured Air Quality Grant funding to develop Clean Air Zone proposals.
The government says it will work closely with local authorities with a view to them finalising detailed proposals covering entry and charging criteria to the Clean Air Zones within 18 months for introduction in 2020 or sooner if possible.
The government is recommending that the minimum emission standard for Clean Air Zones are: Cars and vans, Euro6 diesel or Euro4 petrol; HGVs, buses and coaches, Euro V1; and motorcycles/mopeds, Euro3. Vehicles that do not meet those standards could be charged to enter a Clean Air Zone. The suggested entry criteria mirrors that of the Ultra-Low Emission Zone scheduled to be introduced in central London in September 2019.
Implementation of each Clean Air Zone must be approved by the government before it can go ahead. A framework document outlining a range of measures that should be incorporated within a Clean Air Zone to improve the urban environment and thus move towns and cities to what the government calls “a low emission economy” includes:
- Exploring innovative retrofitting technologies targeted at local bus, taxi or HGV fleets. That and new fuels;
- Buying ultra-low emission vehicles and encouraging local transport operators to do the same;
- Encouraging private uptake of ultra-low emission vehicles via ensuring adequate chargepoints for plug-in vehicles;
- Encouraging use of public transport, cycling, walking, park and ride schemes, and car sharing;
- Improving road layouts and junctions to optimise traffic flow, for example by considering removal of road humps;
- Working with local businesses and neighbouring authorities to ensure a consistent approach; and
- Charging certain types of vehicles to enter or move within the Clean Air Zone.
However, the government argues that charging for Zone entry should be treated by local authorities as a last resort, pointing out it should only be used where local authorities fail to identify equally effective alternatives. However, there is concern as to how effective non-charging Clean Air Zones would be in persuading drivers to stay out of those areas.
If local authorities conclude that charging was the only way to achieve compliance in the shortest possible time, they will be required to set out the detail of: the roads and classes of vehicles subject to a charge, what the charges will be, the manner in which charges would be made, collected, recorded and paid, the hours during which charges would apply, exemptions and reduced rates from charges and enforcement regimes and penalties for non-payment of charges. Automatic number plate recognition (ANPR) would be used for the operation of charging Clean Air Zones.
The government says that local authorities should set the level of charge for vehicles entering a zone appropriate to their local circumstances. The level of charge would be within upper and lower bands, which the government says it will publish at a later date.
Other measures to improve air quality suggested in the raft of government documents published include:
- Reducing speed limits notably on motorways from 70mph to 60mph, although the documents say further monitoring in real world conditions was required
- Improved vehicle labelling to encourage a shift of purchasing behaviour away from new diesel vehicles to alternative vehicle types
- Influencing driver behaviour through eco-driving schemes.
The government’s proposals also say that local authorities and other public bodies operating within a Clean Air Zone should ensure the fleet they operate, or are operated on their behalf, and ideally in the wider authority, meets the standards for the Zone.
The government also believes the arrival of Clean Air Zones give local fleets the opportunity to demonstrate how new technologies and approaches could go further than the standard implemented.
It says that the use of ultra-low emission vehicles, alternative fuels and approaches to ‘grey fleet’ – employees driving their own cars on work-related journeys – could all demonstrate a lead.
The documents go on to say: “This might include working with staff on engagement and incentive schemes to reduce vehicle use, such as car clubs and car sharing schemes, cycling incentives and facilities, or flexible working practices.”
The government also says that it is “determined to lead by example” and was taking action to ensure its operations and purchasing power supported reductions in NO2 and other pollutants.
The government is currently busy updating its Buying Standards for vehicles, which set down minimum mandatory and best practice standards requirements for cars, vans, buses and trucks, and they will focus on encouraging the purchase of ultra-low emission vehicles where appropriate and low NO2 emission models.
Additionally, the government says it will work with the Energy Savings Trust and with local authorities to promote the use of Government Buying Standards throughout local government, the wider public sector and beyond in order to “avoid purchasing diesel vehicles wherever possible”. It says the Standards should be used as the “starting point for fleet procurement and operations”.
Businesses, suggests the government, could also play an important role in improving air quality through both how they operate and through influencing their employees’ behaviour.
The government says: “Improving air quality should be considered an important part of corporate responsibility and sustainability. Businesses which make improvements should be supported and rewarded for their action creating a virtuous circle where the city becomes an attractive place for businesses and their customers.”
The Air Quality Plan proposals recommends that: “Local authorities should work with local businesses to explain the aims of a Clean Air Zone and encourage the uptake of programmes to address air quality. Authorities should encourage businesses to take a lead and work with their local communities.”
That may include:
- Working with SMEs and other businesses to help them understand their options for adapting to a Clean Air Zone, and the support available to them
- Engaging business participation in environmental sustainability and training programmes, for example to improve driver behaviour, and campaigns to raise employee awareness
- Working with local employers to increase awareness in their staff about local public transport choices and alternatives, and initiatives such as car clubs and car sharing
- Encouraging businesses to commit to use only their cleanest vehicles in a Clean Air Zone
- Encouraging businesses to commit, when buying new vehicles, to purchase those in line with or higher than Clean Air Zone standards
- Encouraging businesses to adopt approaches to operations that can support a Clean Air Zone
- Encouraging large taxi or private hire users, such as universities and hospitals, to require ultra-low emission vehicles within their contracts and promote travel planning to minimise use.
- Encouraging the uptake of business recognition schemes such as Go Ultra Low Company status, ECO stars, Logistics Car Reduction Scheme and Fleet Operator Recognition Scheme
- Developing delivery service plans with local businesses.
The consultation document and related papers, which applies to England, Scotland, Wales and Northern Ireland, can be viewed at https://consult.defra.gov.uk/airquality/air-quality-plan-for-tackling-nitrogen-dioxide/
The FSGB view
The clock is ticking for fleets that pollute. Following the 2002 changes in company car benefit-in-kind tax to a regime based on carbon dioxide emissions, diesel has been the default fleet position. It is clear that government policy is to change that yet, as the likes of the Society of Motor Manufacturers and Traders and the British Vehicle Rental and Leasing Association highlight, Euro6 diesel engines are the most energy-efficient internal combustion engines and often the most appropriate powertrain for long distance journeys and non-urban freight transportation so diesel vehicles remain a vital part of the fleet mix, but probably not retaining the dominant position they have held. However, in the new ultra-low emission environment company car decision-making based on whole life costs and fitness for purpose must remain absolute when vehicle replacement is on the agenda. The alternative to diesel vans is less clear cut as petrol-engined models are virtually non-existent and electric models for most fleets are not currently operationally viable. Therefore, diesel will remain first choice but van fleets should look to introduce Euro6 models to ensure they don’t fall foul of any future Clean Air Zone entry criteria.