Following widespread criticism that the Government is failing to take decisive action to reach net zero emissions by 2050, the Government has set out a wide reaching plan to decarbonise all modes of domestic transport by 2050. ‘Decarbonising Transport – A Better, Greener Plan’ sets out the long-awaited strategy from the Department for Transport (DfT) on how the transport sector will achieve net zero emissions.
The most eye-catching measure is a new set of targets for phasing-out new diesel and petrol heavy goods vehicles, with the heaviest vehicles being phased-out by 2040 and lighter vehicles by 2035, alongside the introduction of a mandate for manufacturers to produce a rising proportion of zero-emission vehicles, new efficiency standards for vehicles post-Brexit and action on decarbonising non-road transport, such as aviation.
One difficult question that is far from resolved is what kind of hybrid cars and vans can be sold after 2030. Definitions under consideration include zero emission capabilities and average emissions. Businesses can now share their views on this and we can expect some major divergence between car makers on what they think the best solution is.
Domestic aviation gets a proposed net zero target of 2040 and international aviation by 2050. Projected emissions reduction for the sector still leaves 21 MtCO2 emissionby 2050, which will have to put offset in some way (a mix of direct air capture technology and nature-based solutions the likely outcome).
What does this tell us about the seriousness of government decarbonisation plans?
The strategy shows the wide suite of low-carbon transport initiatives from Government that have been gathering pace in recent years, particularly to decarbonise road transport. Government is aware that it has been heavily criticised for the lack of progress on reducing transport emissions over the last decade, with the sector accounting for 27% of UK emissions in 2019 and emissions reductions flatlining while other sectors made progress. It also sees transport as an area of potential global leadership for the UK, strengthening the current car manufacturing base and expanding into new innovation areas, such as zero-emission flight.
What’s notable is that it broadly argues that we can continue to travel as we do now – by road, rail and air – but we will have to do it in a low-carbon way given the net zero target. This is driven by a fear of public backlash against any signal that the Government will restrict access to air travel or price low-income drivers out of using their cars. While politically wise, avoiding the question of demand management does not chime with what is likely to be required under the net zero target.
Therefore, the strategy does delay some of the more politically challenging decisions that will ultimately be required to deliver a zero-carbon transport sector. Despite the soft signal that carbon pricing will play a role moving forward, there is no clarity provided on plans to replace fuel duty during the transition to electric vehicles, such as with road pricing or other revenue raising schemes. Technology choices for cleaner aviation and maritime are kept open, with a focus on international cooperation to tackle emissions from these sectors. A comprehensive electric vehicle charging infrastructure plan has still not been published. The complex process of reforming the tax and policy framework to dramatically reduce emissions in practice from the transport sector has only just begun.
What does this mean for business?
There is undoubtedly some welcome clarity provided in the strategy for those businesses active in the transport sector. In some sectors, technology choices and expectations set by phase-out dates are becoming clearer. In some, such as aviation and shipping, significant optionality remains.
The strategy starts the firing gun on a wide-range of policy, regulatory and financial reform programmes, such as the consultation on decarbonising aviation and the zero-emission vehicle mandate. This creates an important window of opportunity for business to work with Government on how to balance the need for rapid progress while allowing the market to develop for a mix of low-carbon technologies. This will apply not just to companies involved directly in the sectors, but also a wider range of businesses and investors that are planning their own decarbonisation strategies where travel and distribution are often major carbon contributors.
Announcements such as this are part of the drum-beat of activity ahead of COP26. Momentum towards the summit is building and will accelerate the policy development process over the coming months. It will therefore be vital to engage proactively with Government ahead of firm decisions being made in the autumn.
James Diggle is a Manager at Flint and provides advice to clients with an interest in energy and climate issues. To find out more about how Flint can help you navigate the risks and opportunities of these developments get in touch.