The Energy Bill will hurt UK car makers

One way of supporting the UK motor industry would be to introduce a 2030 decarbonisation target into the Energy Bill to help decarbonisation the fuel needed for electric cars. If Parliament is serious about balancing the economy, it should accept the amendment before it today.

Car maker

Mark Rowney is a research fellow at IPPR

Today the Energy Bill reaches its third reading. The energy industry has warned that jobs and financial investment in their industry were at risk if a decarbonisation target for 2030 was not included in the Bill. As IPPR’s recent report Leading the charge shows, failure to introduce a 2030 decarbonisation target is also a setback for the UK motor manufacturing industry.

That industry is the shining exception to the decline of British manufacturing. It employs one in 40 UK jobs and its trade deficit reduced from £8.6 billion to £1 billion between 2001 and 2011. Britain is now the 5th best exporter of cars in the world. It therefore provides an excellent base for regional and sectoral balancing of the economy.

But a major change is coming to the automotive industry. Two thirds of the world’s economy impose stringent emission standards on manufacturers and so they’re designing cars that are less polluting. Between 2000 and 2012, average UK new car emissions fell from 181gCO2/km to 133gCO2/km. EU emission standards have already imposed a 2020 target of 95gCO2/km and the RAC Foundation has called for a 2025 target of 60gCO2/km. If the UK is to meet its legally binding 2050 targets, every car on our roads must have zero emissions by 2040.

But the laws of physics limit the potential for decarbonising internal combustion engines. By the end of 2014, most major brand names such as Nissan, Renault, BMW, Porsche and Toyota will have introduced new technologies to the market. Already hybrids and plug-in electric cars are on the market and by 2015 we are likely to see hydrogen cars coming to market. Government and industry is even in the early stages of planning a national network of hydrogen refuelling stations.

British motor manufacturing is well placed to take advantage of these changes. To keep export costs down, a strong domestic market in electric cars is needed if Britain is to remain attractive to a globally competitive industry. Sadly, Britain ranks only 15th in Europe in electric car take up.

38 per cent of customers who buy any car cite its environmental friendliness as an important factor in their choice of model and IPPR’s research showed that amongst the early adopters of electric cars, this was a particular concern. Yet because of the carbon intensity of our electricity system, it is possible that on any given day a Nissan LEAF made in Sunderland can have a higher carbon footprint than a diesel car.

Over time as sales of electric cars increase, the carbon burden they place on our electricity system increases. The graph below shows that under current projections, total carbon emissions from all electricity will fall below those of an oil and biofuel mix around 2020. But, people are likely to charge their cars at peak times (before and after travelling to work) when power generation will be more carbon intensive than oil and biofuels until around 2027.

If Britain slips in its plans to decarbonise its power sector, this pushes back the date at which electric cars will definitively be less carbon intensive than other cars.

Graph: Emissions intensity of electric vehicles (gCO2/kWh).

Energy bill

Source: National Grid

Today’s buyers of electric cars need to know that their purchase contributes to national efforts to decarbonise the economy by 2050 that is not negated by dirty power stations.

It’s not surprising therefore that the former chief executive of the Society of Motor Manufacturers and Traders, Paul Everitt, said to the transport select committee “Government should be taking a stronger role with the infrastructure and the power generators to ensure that they too have a coherent roadmap to deliver the resilient and decarbonised grid we need post-2025”.

He was immediately endorsed by Graham Smith, Managing Director of Toyota Europe.

One way of supporting the UK motor industry would be to introduce a 2030 decarbonisation target into the Energy Bill to help decarbonisation the fuel needed for electric cars. If Parliament is serious about balancing the economy, it should accept the amendment before it today.

2 Responses to “The Energy Bill will hurt UK car makers”

  1. Bob_Dyson

    It seems the energy bill has come at a wrong time when car service industry is looking to recover.

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