The UK Prime Minister announced that government was consulting on bringing forward the end to the sale of new petrol and diesel cars and vans from 2040 to 2035, or earlier if a faster transition appears feasible, as well as including hybrids for the first time.

This reflects the Independent Committee on Climate Change’s advice on what is needed in order for the UK to end its contribution to climate change by 2050. The proposals relate to new cars and vans – owners of existing petrol, diesel and hybrid cars and vans will still be able to use these vehicles and buy and sell them on the used market.

The UK Department for Transport are asking for views on:

• the phase out date
• the definition of what should be phased out
• barriers to achieving the above proposals
• the impact of these ambitions on different sectors of industry and society
• what measures are required by government and others to achieve the earlier phase out date.

Key points: End of new petrol, diesel, electric hybrid vans and cars

The electric vehicle transition is underway. These vehicles will soon be consistently cheaper to own than comparative Internal Combustion Engine vehicles (ICEs) and in some cases already are. At the same time, air quality violations are leading to localised bans on ICEs which will drive the transition to alternative mobility options. Energy Systems Catapult’s view are that:

Phase out date for older vehicles

• Our own modelling and analysis supports a final phase out date of 2035 at the latest
• Legislating an ambitious phase-out date for ICEs will accelerate the transition which is already underway, driving decarbonisation, placing the UK as a worldwide leader in this industry and bring benefits to consumers and UK plc.
• We strongly urge earlier dates for ending sales through a phased approach potentially with multiple phase out dates and time-limited derogations as part of a comprehensive plan.

The definition of what should be phased out

• Phasing out of ICEs needs to be tailored to accommodate Plug-in Hybrid Electric Vehicles (PHEVs). Policy must be designed to minimise emissions from PHEVs through, for example, obligations on manufacturers to improve emissions performance of PHEVs, ensuring these vehicles’ batteries have a reasonable range and that consumers use and recharge the electric battery. If this cannot be achieved, then the ban on PHEV sales should be sooner rather than later.

Barriers to achieving end of diesel and petrol cars

• Electricity markets and policy – Substantial reform of electricity markets and associated policy is needed in order to fully reveal the value of flexibility, particularly on the demand-side (including EVs), along with enabling its capture by EV owners/users and aggregators.
• Information asymmetry – consumers would benefit from a transparent break down of Total Cost of Ownership (TCO) for any vehicle purchase i.e. vehicle purchase cost, energy costs, levies/taxes and financing costs. In addition, carbon taxes/levies applied to fossil-based vehicles are best applied upfront at time of purchase, without the possibility to wrap into finance deals.
• Psychological distance – increasing awareness and knowledge of EVs possibly through information mandates, Government-sponsored information campaigns or impartial information provision.
• Sharepoint access – chargepoint infrastructure must be easy to use, meet user needs (i.e. charge time) and available for all user groups before all user groups can transition away from ICEs. This is particularly important for users without off-street parking.

Impact of ambitions on different sectors of industry and society

• Energy sector – the energy sector can successfully manage this new demand (which could equal 30% of today’s electricity consumption by 2050) but as highlighted by the Electric Vehicle Energy Taskforce, reforms in multiple areas will be needed, particularly if this is to be done at least cost with maximum value for consumers and if sufficient investment is to come forwards.
• Smart Charging – one key area where ambitions must be raised and progress accelerated is the enabling of smart charging.

What measures are required by government and others to achieve the earlier phase out date

• It must be remembered that all actions that should be undertaken to prepare for the phasing out of ICEs, would also need to be completed in the absence of this ban. That said, as this policy will accelerate the uptake of EVs, the necessary complementary actions must be faster, better coordinated and with more support for specific user groups.
• Phase-out policy must be introduced as part of a comprehensive cross-department strategy which supports industry’s transition and future competitiveness, protects and empowers consumers, ensures a fair transition and harnesses the opportunities from this disruptive transition.
• Policy measures, at EU and UK level, can be applied to the supply side to ensure that manufacturers are working to produce vehicles that are affordable, appealing and efficient.
• As consumers are highly concerned with risk it may be necessary to support the second hand market with focus on providing assurances, either obligations on manufacturers (e.g. requiring warranties to be transferable to subsequent owners if still within the warranty life) and establishing affordable, independent testing (e.g. on battery degradation/capacity).
• A phase-out plan for ICEs should be part of a comprehensive sustainable transport policy package that includes measures to reduce the demand for transport and promotion of alternative low-carbon transport modes.
• Government links the planned increase in low carbon generation capacity (through CfD auction rounds) to a targeted increase in electricity demand from electrified transport and heat. Furthermore, any incentives promoting EVs could be linked to requirements to consume renewable energy and to adopt tariffs or contracts for smart-charging.
• Substantial reform of electricity markets and associated policy is needed in order to fully reveal the value of flexibility, particularly on the demand-side (including EVs), along with enabling its capture by EV owners/users and aggregators.
• Government must regulate to ensure data on chargepoint location, characteristics, state of charge and use is visible and accessible.
• Continue the work on interoperability, cyber security, data protection and consumer protection.
• Government will need to consider fiscal reforms to address declining revenues from fuel duties. But it is equally important that reforms help to deliver a more coherent set of ‘effective’ carbon prices14 across energy vectors and sectors of the economy.
• Taxation on vehicles must evolve towards the key factors relating to the externalities of passenger cars/vans/lorries i.e. weight, vehicle width, miles travelled. Road user charges could also develop to improve demand incentives on road usage and help to internalise the congestion externality (by time, location).