Parliamentary debate 19/4/17: A diesel vehicle scrappage scheme

Diesel vehicles on the road

The proportion of cars fuelled by diesel in Great Britain has almost doubled over the past decade, from 20% in 2005 to 37.8% in 2015 [DfT Table VEH0203]. This has been a steady climb, and has seen the proportion of petrol-fuelled cars decline on an almost 1-to-1 basis. While the number of alternative-fuel cars on the roads has been increasing in recent years, latest (2015) data still show that these represent only 1% of the total stock of licensed cars:

However, diesel’s market share has started to decline in the last few years. This decline can also be observed in figures for the whole of Western Europe: diesel’s share of new cars in the region fell from 56% in 2011 to 50% in 2016.

The most recent data for the UK show a continuation of this trend. Diesel’s share of new cars for the first three months of 2017 was 44%, compared to 47% for the first three months of 2016. A report by JPMorgan (April 2017) forecasts that diesel’s share of new cars in Europe is likely to fall to 30 percent by 2020.

The problem with diesel

This 2011 Defra webpage provides information on sources of air pollution. It highlights that whilst historically, air pollution came primarily from burning of fossil fuels for domestic and industrial uses, traffic emissions are now the most important source:

Historically, the main air pollution problem in both developed and rapidly industrialising countries has typically been high levels of smoke and sulphur dioxide emitted following the combustion of sulphur-containing fossil fuels such as coal, used for domestic and industrial purposes. These days, the major threat to clean air is now posed by traffic emissions. Petrol and diesel-engined motor vehicles emit a wide variety of pollutants, principally carbon monoxide (CO), oxides of nitrogen (NOx), volatile organic compounds (VOCs) and particulate matter (PM10), which have an increasing impact on urban air quality. In addition, pollutants from these sources may not only prove a problem in the immediate vicinity of these sources, but can be transported long distances.

Photochemical reactions resulting from the action of sunlight on nitrogen dioxide (NO2) and VOCs, typically emitted from road vehicles, lead to the formation of ozone. Ozone is a secondary pollutant, which often impacts rural areas far from the original emission site as a result of long-range transport.In all except worst-case situations, industrial and domestic pollutant sources, together with their impact on air quality, tend to be steady or improving over time. However, traffic pollution problems are worsening world-wide

In an effort to reduce carbon dioxide emissions, in Budget 2001 the Labour Government introduced “a 3 pence per litre reduction in the duty on ultra-low sulphur diesel (ULSD)”. In addition, it changed the Vehicle Excise Duty (VED) for cars registered on or after 1 March 2001, basing it on carbon dioxide emissions and fuel type. This tends to favour diesel cars as they tend to have lower carbon dioxide emissions compared to similar petrol models.

However, it has since become apparent that while producing less carbon dioxide, diesel engines normally produce much more nitrogen oxides and particulate matter that petrol engines. Commonly quoted figures state that diesel engines emit around four times as much nitrogen oxides, and around twenty times as much particulate matter that petrol engines. The Department for Environment, Food and Rural Affairs stated in a 2016 report that:

• Road transport still accounts for 34 per cent of UK NOx emissions in 2015 and the rate of reduction from this sector has slowed down due to the increased contribution from diesel vehicles.

In 2014, the then London Mayor Boris Johnson told the Environmental Audit Committee that the push towards diesel vehicles was a “massive failure of public policy” [HC 212, December 2014, Q108]. In 2015, the then shadow environment minister, Barry Gardiner, told Channel 4 “There’s absolutely no question that the decision [the Labour Government] took was the wrong decision. But at that time we didn’t have the evidence that subsequently we did have”.

Suggestions for a scrappage scheme & Government views

The Government has not as yet given an indication that it would support a diesel scrappage scheme. In the March 2016 Budget the Chancellor indicated that if there are going to be changes affecting diesel it will not be until the autumn. [Red Book, para 5.11].

There have been rumours recently (e.g. here) that a scrappage in the works but nothing official has been said. Motoring organisations have called on the Prime Minister to support a scrappage scheme. In February 2017, nearly 300 healthcare professionals wrote to the Prime Minister expressing concerns about the health impacts of air pollution and calling on the Government to introduce a national diesel reduction initiative.

During a trip to the Middle East in early April 2017 Mrs May said she was “very conscious of the fact that past governments have encouraged people to buy diesel cars and we need to take that into account” when drawing up a new Air Quality Plan.

A scrappage scheme could have significant costs to the Exchequer. In December 2016 the Transport Minister John Hayes, in evidence to the EFRA Select Committee, said:

A scrappage system would be immensely costly because, to encourage people to scrap their existing cars, the scheme would have to be extremely generous. I am not sure that it is a place that we can go yet. Nothing is ruled out, and I am not ruling it out, but I do not want to give you a blithe, easy answer that we will get rid of all the diesels, they are all going to go, we will have a national scheme and all the rest of it when I do not necessarily think we will. [Q105]

The Mayor of London, Sadiq Khan, has published detailed proposals for a national scrappage scheme and a model for cities to tackle air pollution from diesel. Key recommendations included:

• payments of £3,500 to scrap up to 70,000 polluting vans and minibuses in London and a national fund to support charities and small businesses that often own older diesel and mini buses (approximately £245 million in London);
• a credit scheme valued at £2,000 to help low-income households in cities (those with incomes lower than £231.60 per week after housing costs) scrap up to 130,000 polluting cars, with incentives for car clubs and public transport (costing approximately £260 million in London); and
• payments of £1,000 to help scrap up to 10,000 older polluting London taxis (this is in addition to extra TfL help for drivers to upgrade to greener taxis): traditionally the taxi trade has had a limited choice of heavy, polluting diesel vehicles but this proposed fund would be used alongside wider existing support to help drivers switch to new zero-emission models (approximately £10 million in London).

Cost and benefits of scrappage schemes

There have been assessments of the lifecycle costs of scrapping old cars and replacing them with new ones. However, this debate has generally focused on the carbon costs of producing new cars versus driving older ones. In other words on the resource and carbon costs of manufacturing a new car. This was discussed in a Telegraph article, Which is greener – new or old, from 2014.

However, the environmental impacts of scrapping a car have reduced in recent years due to EU regulation. Since January 2015 under the End of Life Vehicle Directive 95% of a cars must be recycled - the requirement is a minimum of 85 per cent of material be recycled or reused, while the additional 10 per cent can be met by processing unrecyclable materials through waste-to-energy facilities or recovering material such as glass for use in aggregates.

In addition, the focus is different when comparing the air quality benefits – which is what drives the current debate - of replacing older cars with newer ones in a given area. The positive impact would be immediate and could be significant if uptake was high. Appendix 1 of The Mayor of London’s report also highlights that scrappage schemes in the past have tended to result in the oldest cars, and therefore more polluting cars, being replaced. The average age of cars scrapped under the UK 2009 scheme was 13 years.

However, scrappage schemes do have an associated cost and this is where the difficulties of the scheme may arise. The complexity of a scheme may also be an issue.

Other ways to deal with diesel pollution

Car tax: Currently VED for cars registered before 1 March 2001 depends on its engine size. The rate for cars registered on or after 1 March 2001 depends on CO2 emissions and fuel type. This tends to favour diesel cars as they tend to have lower emissions compared to similar models. However from April 2017 the first VED payment for new cars registered after that date will be based on CO2 emissions. After that it will be based on fuel type, with £140 a year for petrol or diesel engines; £130 a year for alternative fuels and £0 for electric cars.

Any changes to VED for existing cars that reflect the level of NOx or PM pollutants produced by different car makes, could discourage the purchase of older diesel cars as they will be more polluting than new diesels. It could also encourage the purchase of new diesel car makes that are compliant with the Euro 6 standard. Changes to the new rates for diesel post April 2017 would affect new car registrations only.

Move towards electric vehicles: The Government is increasingly focusing on encouraging the uptake of electric vehicles. A lot of debate currently focuses on replacing diesel cars with electric vehicles, rather than encouraging a shift back to petrol engines. Some of the reasoning around this was summarised in a briefing paper from the London Forum for Science and Policy at Imperial College published April 2016:

Technologies for clean electricity production already exist and electrification of vehicles will therefore both displace NOX and PM emissions to power stations outside residential areas in the immediate term, and in the longer term provide a ready means to reduce greenhouse gas emissions. Based on the technologies currently available, a shift from diesel to electric is a far more cost-effective strategy than a shift from diesel to petrol, followed by a future shift to electrification. Promoting a shift to electric vehicles is now largely a matter of public awareness. Battery range and charge time are the main stated reservations of consumers to electric vehicles, yet with vehicles such as the Tesla Model S boasting ranges of over 400 km (250 miles) per charge and a charge of 200km (170 miles) achievable in as little as 20 minutes with some technologies, these reservations should pose little barrier to uptake.

Ensuring proper compliance with Euro 6: There is now only a small difference in emissions between new Euro 6 petrol and diesel vehicles. The Euro 6 rules for new cars are summarised by the AA. The Euro 6 standard imposes a significant reduction in NOx emissions from diesel engines (a 67% reduction compared to Euro 5) and establishes similar standards for petrol and diesel, but not quite identical – diesel is slightly higher on NOx and petrol slightly higher on CO. Commenting on the difference between diesel and petrol the International Council on Clean Transportation said last year:

Euro 6 tightens the diesel NOX standard by 55% with respect to Euro 5, and tightens the HC+NOX standard by 26%–39% depending on vehicle type. This partially addresses the long-standing issue that European emission standards are not fuel-neutral. Even under the Euro 4 standards, NOX limit values for diesel vehicles were three times the limit values for gasoline vehicles. With Euro 6, NOX emission limits for diesel vehicles are only 25% higher than for gasoline vehicles, a smaller margin than in any previous standard. With the use of DPFs [diesel particulate filters] to meet Euro 5 PM and PN limits, particulate emissions from diesel cars also approach those of gasoline cars. Euro 6 limits bring overall emissions of diesel and gasoline vehicles close to parity, provided that vehicles of both fuel types conform to standards in real-world driving conditions.

However, the VW emissions scandal has thrown the whole area of Euro compliance and enforcement into the air. There was a problem with the introduction of new real driving emissions (RDE) testing methods and how they relate to Euro 6. In effect, new vehicles could still be allowed on the roads even if they breach the Euro 6 rules until 2021. The European Parliament’s debate on this measure rehearses the arguments for and against this change, including the lead-in time required for industry to adapt (see EP Deb 18 January 2016, item 16). The UK Government supported the change. The Transport Select Committee looked at these issues in more detail in its July 2016 report.

Local road charges/parking charges: The Labour Government legislated to allow local authorities to establish local road charging schemes in their areas, aimed at combating congestion and tackling poor air quality. However, the use of some schemes had so far been limited - see Library briefing paper Local Road Charges. The most well-known example is London, which introduced a ‘low emission zone’ in 2008 and plans to extend it by 2019. In February 2017 the Mayor of London announced the introduction of a £10 ‘toxicity charge’ in central London from Autumn Half-Term 2017. (‘Mayor: £10 ‘toxicity charge’ for most polluting cars starts October 23, 17 February 2017).

More recently, poor air quality in many urban areas has led to a resurgence of interest in local road charges, specifically by introducing ‘low emission’ or ‘clean air’ zones in five cities: Birmingham, Leeds, Nottingham, Southampton and Derby (although none of the cities would be required to implement a charge covering private cars). See consultation on the implementation of Clean Air Zones in England (October 2016). The Government is analysing responses to the consultation. Further details are likely to be set out in the revised Air Quality Plan.

Finally, some local areas have decided to introduce a parking surcharge for the most polluting vehicles (e.g. Westminster).