The National Audit Office (NAO) recently published a report on the government’s efforts to reduce carbon emissions from cars. The NAO concluded that the government cannot demonstrate the impact that more than £1bn investment over the past ten years has had in encouraging the use of ultra-low emission cars.
While the report acknowledges that sales of ultra-low and zero emission vehicles have increased, it is unclear to what extent this is beyond the level of normal growth in the market that might have been expected without government intervention. Concerningly, total carbon emissions from cars have remained broadly the same since 2011.
Cars contributed 19% of UK carbon emissions in 2018. Reducing these emissions is central to the government’s flagship and, since 2019, a legally binding aim of the UK achieving net zero carbon emissions by 2050.
A key pillar of the government’s strategy to reduce emissions from cars has been to encourage the purchase of ultra-low and zero emission cars. It has also set an ambitious target of banning the sale of new petrol and diesel cars from 2030 and phasing them out altogether by 2050. The Office for Zero Emission Vehicles (OZEV) is the cross-government team responsible for overseeing this transition.
The government invested over £1.1bn between 2011 and March 2020, with the vast majority going to the plug-in car grant. Paid to manufacturers or dealers, this grant reduces the cost of purchasing a new ultra-low emission car by £3,000. Even allowing for the grant, the average purchase price of a zero emission car is still £13,000 more than those of typical petrol or diesel cars.
By September 2020, ultra-low emission cars made up 8% of new car sales, above the 3% - 7% forecast by OZEV in 2013. However, the NAO reports that OZEV has not been able to demonstrate whether this was due to the grant or whether this would have occurred anyway.
In particular, before introducing the grant in 2011, OZEV did not forecast the growth in sales that would have occurred without the grant due to uncertainties in the market and it is now impractical to do this retrospectively. The NAO noted that when the grant has been removed from certain categories of vehicles, this has not had a major impact on sales.
One of the NAO’s recommendations is that OZEV should establish clearly what impact the public money committed will have and how this will be monitored. This recommendation is key not just for reducing carbon emissions for cars but more widely in the government’s ambitions for the UK to reach net zero by 2050.
We can expect a variety of different interventions in this area and the government will need good quality data to learn which types of intervention are the most effective use of limited public resources in reaching this ambitious target. Indeed, one of the NAO’s recommendations is for OZEV to learn lessons and use data to consider a more targeted approach.
A significant finding in the NAO’s report is that carbon emissions from cars have been broadly flat since 2011, despite the growth in the use of electric vehicles. This contrasts sharply with the 15% fall expected. Average emissions from new cars actually increased by 6% between 2016 and 2019.
Lack of progress indicators
The report identifies several factors behind this lack of progress including methodology changes that have resulted in higher emissions reported for cars. It is unclear from the report whether it is possible or whether OZEV has attempted to re-calculate emissions figures from previous years using the new methodology. This again shows the importance of reliable, consistent data as it would establish whether the lack of progress is simply a result of methodological changes or a serious issue that needs addressing.
One cause of the increase in emissions from new cars since 2016 is the sharp rise in sales of sports utility vehicles (SUVs). These made up 25% of new car sales in 2019 compared to only 6% in 2008. This increase is substantially greater than the increase in sales of ultra-low and zero emission cars, casting doubt on the effectiveness of the government’s strategy. The government needs to consider whether subsidising ultra-low or zero emission vehicles is the most effective way of reducing carbon emissions from cars, especially if the popularity of SUVs could offset the impact of doing so.
Oliver Simms, Manager, Public Sector Audit & Assurance for ICAEW, commented: “Achieving carbon neutrality by 2050 will not be easy, and market interventions are one tool that could help. However, as the NAO highlights, it has not been possible to confirm whether the over £1bn invested so far in supporting purchases of ultra-low and zero emission vehicles has contributed to achieving that goal and hence been an effective use of public money.”
The NAO’s principal recommendation is for the government to set clear milestones to deliver the 2050 target and to link these to phasing out petrol and diesel cars from 2030. Good quality data will be required if the government is going to be able to effectively report on progress against these milestones.
“Good quality data combined with clear objectives and milestones will be essential if the government is to be able to make the evidence-based investment decisions that will be needed to deliver net zero carbon”, Simms concluded.
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