The petrol and diesel phase-out: what do businesses need to know?

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Petrol and diesel phase out

The petrol and diesel phase-out: what do businesses need to know?

The government is planning to ban the sale of new petrol and diesel cars from 2035, to help it reach the UK’s target of net zero carbon emissions by 2050. What do businesses need to know?

Why 2035?

The government originally set a date of 2040 for a ban on new petrol and diesel cars. The Committee on Climate Change warned last year that this is too late, and recommended 2030 instead. (We repeated their warning in our January article about net zero.) So the change to 2035 may be an attempt at a compromise between what experts are recommending and what feels practical/politically acceptable to the government.

Does this mean no more combustion engines on the roads from 2035?

Absolutely not. The ban is on the sale of new petrol and diesel cars. If you buy a new car before the ban comes in, you can continue driving it after 2035 for as long as you like. You will also be able to buy a second-hand petrol or diesel car after 2035. So UK roads may look very similar in 2035. It’s even possible that there will be a rise in sales of new petrol and diesel cars as 2035 approaches, as people rush to get a new car before the ban comes in.

In the UK, cars and vans are on average 8.1 years old. So businesses that operate a fleet of vehicles will probably be making big decisions well ahead of 2035.

Are hybrid cars exempt?

No. If a hybrid car burns petrol or diesel, it still comes under the scope of the ban even if it also has an electric motor. So you won’t be able to buy a new hybrid after 2035 either. But, as with petrol and diesel cars, you’re free to buy one second-hand or continue driving the one you bought before.

Will there be a scrappage scheme or any other help for businesses to meet the costs of switching to electric?

New electric cars and vans are currently more expensive than petrol and diesel ones on the whole, so many businesses would find it uneconomical to switch now. But this may not be the case by 2035, as the price and size of batteries is steadily reducing and car-makers are increasingly competing to develop cheaper and better electric vehicles. This may be why the Government hasn’t yet announced an official scrappage scheme; it may be waiting to see if the issue of the cost differential is solved by the technology and the free market. The Government’s Road to Zero strategy, published in 2018, says: “As the market becomes better established and more competitive, the need for direct government financial support will decrease.”

What help is there now for businesses to switch to electric early?

There are already Government subsidies available to incentivise businesses (and the public) to switch.

At the moment, you can get a discount on buying a new plug-in electric car through a grant that the Government gives to vehicle manufacturers and dealers. Cars eligible for the grant have to have CO2 emissions of less than 50g/km and be capable of travelling at least 70 miles with no emissions at all. Unfortunately, the maximum possible discount is £3,500, which means vehicles eligible for the grant will still be unaffordable for many. For example, if you chose a compact Nissan Leaf retailing at around £30,000, you would still be paying over £26,500 even with the full subsidy. You could get a new petrol or diesel car of a similar size from £12,000.

The subsidy for plug-in electric vans covers 20% of the purchase price and has a more generous maximum of £8,000. So if you were buying an LDV EV80 van retailing at around £60,000, you would actually pay more like £48,000. But that’s still very expensive compared to the standard diesel model at under £15,000.

Where will we charge electric cars and vans?

The Government’s January 2020 briefing on electric vehicles acknowledges: “Without enough charge-points, [electric vehicle] ownership is not practical.” According to Zap-Map, a platform that helps drivers locate charging points, there were 8,639 public charging points in the UK as of June 2019. These are distributed unevenly, with London and south-east England getting the best coverage while Wales and Northern Ireland struggle.

The government calculates it needs to create over 27,000 public chargers for “top-up charging” and nearly 29,000 charging points overall if it is aiming to encourage a situation where electric vehicles form 60% of new car and van sales by 2030. So for electric cars and vans to be a viable option for businesses, we will need to see the number of public charge-points triple in the next 15 years.

However, the assumption underlying this goal is that the government expects most electric vehicles will be charged privately. The Workplace Charging Scheme (WCS) offers help with the initial costs of buying and installing a charge-point on the premises of your business, charity or public sector organisation. It pays up to 75% of the costs, up to a maximum of £500 per charging point.

We don’t yet know if the government will actually succeed in tripling the number of public chargers available. We also don’t know if businesses, charities and public sector organisations will really create enough of their own charging points to fulfil the government’s expectation that private charging points will outnumber public ones. So it’s impossible to say whether there will be enough charge-points to meet demand by 2035, especially in the areas of the UK which are currently underserved.

What else do I need to know?

The Government hasn’t yet offered much detail on how it will make the phase-out of petrol and diesel practical for businesses and the public, so we’re expecting to hear a lot more over the coming months, especially with the Budget due in March. As ever, keep an eye on the Energy Advice Hub for the latest news and analysis.

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