The green road to electric vehicles – is it time for fewer carrots and more sticks?
“We have to hurry, we have to get faster in the fight against climate change.”
Those were the words of Angela Merkel, the German Chancellor, after surveying the devastation caused by record floods in western Germany in early July.
Private transport is one of the world’s biggest sources of greenhouse gases, with emissions rising every year, and the transition to electric vehicles is fundamental in the fight against climate change.
But are the carrots currently offered by the Scottish and UK governments enough to win that fight, or do we need more sticks?
Climate change targets
As we tackle the consequences of the worst public health emergency in a generation, the Scottish Government has committed to ensuring that the economic recovery from Covid-19 is a green one.
This green recovery will contribute to Scotland’s legally-binding targets of a 75% reduction in all greenhouse gases compared with 1990 by 2030 and net zero emissions by 2045.
Cutting emissions by three-quarters in just 10 years, while navigating our way out of the financial and social impacts of Covid-19, will require a concerted and collaborative effort, and in some sectors a fundamental societal shift.
Transport is the largest source of carbon emissions in Scotland and, with the largest proportion of transport emissions coming from cars and taxis the transition to electric vehicles (EVs) is crucial to our net-zero ambitions.
In December last year, the Scottish Government updated its Climate Change Plan for the period stretching to 2032. This update included a commitment to phasing out the need for new petrol and diesel cars and vans by 2030.
This target has also been set by the rest of the UK, with all new cars and vans to be zero emission at the tailpipe from 2035.
Despite regular polls showing the public broadly supports EV usage, car buyers are still not making the shift to EVs en masse. So what are the barriers preventing greater uptake?
In a report in May, the UK Parliament’s Public Accounts Committee concluded: “Consumers are not all yet convinced that zero-emission cars are a suitable alternative to petrol and diesel models, with concerns over the affordability of these vehicles, the distance they can travel on a single charge and the availability and accessibility of charge-points when and where required.”
Technological developments are going some way to addressing these concerns. Battery costs are falling, which means the gap between the purchase price of a fully electric vehicle and a conventional fuel car is narrowing.
Fast-charging battery technologies and the development of batteries with a higher mileage range are also helping to address the issues of charging speed and range anxiety.
However, technological innovations alone will not achieve the uptake necessary to meet the 2030 and 2035 phase-out dates. Government intervention is required, and the Scottish and UK governments have implemented a range of measured designed to support the EV transition, favouring ‘carrots’ (in the form of grants and tax incentives) to date, rather than ‘sticks’.
Currently there are UK-wide grants of £2,500 available towards the purchase of a new zero-emission car, and £350 towards the cost of installing a domestic charge point. In Scotland, drivers can also get an interest-free loan of up to £28,000 to cover the cost of purchasing either a new or – since September 2020 – a second hand, zero-emission car, and an additional £250 towards the cost of a domestic charge point.
The Scottish Government also provides funding to public sector bodies through the Switched on Fleets initiative to assist them in transitioning their own fleets. Grant funding is also available to Scottish businesses and public sector bodies towards the cost of installing EV infrastructure, including via the Switched on Towns and Cities initiative and the Low Carbon Travel and Transport Challenge Fund.
The Scottish Government, through Transport Scotland, is currently investigating new finance models for EV charging infrastructure in collaboration with Scottish Futures Trust. Given the huge expansion of the network that is required, the current model of giving capital grants to local authorities to install and maintain public charge points, and using back office services provided by Transport Scotland, is unsustainable.
However, the days of preferring carrots over sticks may be numbered. On July 14, the UK Government published its long-awaited Transport Decarbonisation Plan, in which it indicated that greater regulation is required to meet the 2030 and 2035 targets.
The plan was accompanied by a Green Paper in which the government is consulting on whether to tighten existing efficiencybased regulations, requiring new vehicles to emit gradually lower levels of
carbon dioxide until 2035 when all new cars sold in the UK must be zero emission, or to introduce a ‘zero-emission vehicle mandate’.
Under such a mandate, manufacturers would be required to sell a certain volume of zero-emission vehicles as a share of their overall sales, backed up by carbon dioxide emission limits (the government’s preferred option).
The UK Government intends to introduce this regulatory framework in 2024. The Transport Decarbonisation Plan was also accompanied by a Delivery Plan for the transition to zero-emission cars and vans by 2035.
This plan confirmed that the UK Government will pass regulations to improve the customer experience of public charging, possibly through a single payment metric so drivers can compare prices across different charging networks, and by standardising payment methods.
Further regulations will also ensure that all new-build residential buildings in England with an associated parking space have a charge-point and that all new private charge-points have smart capability.
The government also signalled that it will focus efforts on putting in place a policy and regulatory framework to support increased private investment in public charging infrastructure, although it did not indicate what form those regulations might take.
Is this enough?
As the Scottish Government grapples with how to bring in private investment to fund the charging infrastructure rollout, it is clear there is not an infinite supply of incentives to fund the EV transition.
The new regulation detailed in the Transport Decarbonisation Plan will go some way to accelerating the uptake of EVs, but do the UK and Scottish governments need to be more ambitious? Introducing a ‘polluter pays’ model of pay-as-you-go road charging or increasing taxes for petrol and diesel cars are some of the bigger sticks that environmental campaigners and EV manufacturers such as Tesla frequently lobby governments to wield.
As we approach Cop26, it remains to be seen whether the Scottish and UK governments’ current measures are enough to meet the conference goal of ensuring a transition to zero-emission vehicles in a timescale consistent with the global warming limits in the Paris Agreement. Perhaps it might be time for UK leaders to put down a few carrots and wield some bigger sticks
To learn more about future funding models for public EV charging infrastructure, join Shepherd and Wedderburn on Wednesday 18 August for The Green Road – Private Investment in Public EV Charging, a live virtual event featuring guest speakers from Scottish.
Futures Trust. To register, please click here.
Susan Swan is a Senior Associate in Shepherd and Wedderburn’s Energy and Commercial Contracts team. For more information, contact Susan on 0141 566 8510 or at firstname.lastname@example.org.
Why we’re at a crossroads on the journey to net zero
The SCDI blueprint outlines opportunities for a collaborative green industrial revolution The Scottish Council for Development and Industry’s 2030 Blueprint, Making a Good Living, with its positive outlook and ambition for, among other things, clean energy and decarbonisation, arrives at a critical point in Scotland’s journey to net zero. Resilience needs to be built into our…
Ups and down of a rollercoaster corporate year
It’s been something of a roller coaster ride this year in Scotland’s corporate and M&A sector. That’s hardly surprising given the huge disruption caused by Covid-19. However, it hasn’t been…