Press Story

Osborne and Cable should act now to put the UK in the fast lane towards a green car fleet, according to new research published today (Friday) by think tank IPPR. The report says that to meet climate change targets, 1.7million vehicles will need to be electric or plug-in hybrid by 2020, a tough car emissions targets is needed and that that the best R&D into low carbon motor manufacturing needs to be co-ordinated and backed by Government.

New analysis by IPPR, using an econometric model to predict the impact of the shift to green cars, shows that fuel duty revenues (more than 2 per cent of GDP in 2010) will more than halve in real terms by 2030 - by at least £10bn. As well as depriving the Government of much-needed revenue, such a shift in the costs of motoring could harm growth as it will lead to greater congestion. The report shows that declining North Sea oil reserves will lead to increased oil imports unless the UK decarbonises its road transport sector.

The report argues that the Government should build on the forthcoming road-user charging scheme for HGVs by piloting revenue neutral 'pay-as-you-go' driving schemes after 2015.

Nick Pearce, IPPR Director, said:

"To meet our climate change targets we need to decarbonise road transport over the next decade, which means setting a tough target for car emissions of 95g/km by 2020. If UK manufacturing is going to be at the forefront of this green cars revolution, we also need an active industrial strategy that backs the best R&D.

"Our analysis shows that the Treasury is going to lose at least £10bn of revenue by 2030 in reduced fuel duty. Road-user charging is going to need to be carefully introduced to make up for this loss of revenue, building on the forthcoming scheme for HGVs and on the experience of toll roads like the M6."

IPPR's report recommends:

An exhaust pipe emissions standard of 95g/km or better by 2020, with a review in 2015 to examine possible tightening if technology moves faster than policy.
Strong UK government support for a mandatory standard in at the European Union level.
The launch in 2013 of a new 'feebates' scheme to encourage consumers to buy new vehicles below a specified level of emissions and enjoy a rebate paid for out of fees charged on vehicles above the specified level.
Partnerships with the private sector to install the planned public charging points in urban areas to overcome consumer anxieties about the range of electric vehicles.
A UK automotive innovation strategy focussed on five grand technological challenges, with an increasing sum of government money invested in R&D.
The implementation of the Coalition's planned road pricing scheme for HGVs.
Voluntary trials from 2015 onwards of revenue neutral pay-as-you-drive schemes offering motorists the opportunity to opt out of fuel duty and into a distance-based road pricing scheme.
A government-led partnership initiative to bring low-carbon car sharing schemes to communities in need of better transport interconnection.

The report also argues that a framework for vehicle decarbonisation should be set within a wider transport strategy aiming to address the looming travel affordability crisis, ensure deep emissions reductions and integrate a wide variety of different modes of transport.

Notes to Editors

IPPR's new report - 'Untying the knot' - is available to down load from http://bit.ly/IPPR8106

The Committee on Climate Change's fourth carbon budget report projects that hitting climate targets will require 1.7 million of the vehicles on the UK's roads to be either fully electric or plug-in hybrid by 2020.

In 2010, the combined revenue from fuel duty and VAT on fuel and fuel duty was £29.5billion.

The total number of cars in Great Britain is forecast to rise from 28.5 million in 2010 to 36.4 million in 2030, according to the Department for Transport. Under this scenario take-up of electric cars reaches 60 per cent of new vehicles (31 per cent of the fleet) in 2030, of which 30 per cent are battery electric and the remaining 70 per cent are plug-in hybrid cars.

Contacts

Richard Darlington, 07525481602, r.darlington@ippr.org

Tim Finch, 07595 920899, t.finch@ippr.org