Written evidence from Petrol Retailers Association (ELV0082) 

Petrol Retailers’ Association – Submission to the House of Lords and Climate Change Committee call for Evidence on the upcoming 2030 and 2035 deadlines.

The Petrol Retailers Association (PRA) represents independent fuel retailers, who comprise 64% of the UK’s total forecourt infrastructure. During the fuel supply crisis of October 2021, the PRA was a key source of information for Government officials. We are one of the only actors in the fuel supply chain that is able to publicly comment on fuel pricing and have duly made ourselves available to Government officials.

Introduction

Our members are supportive of the Government’s plans for Net Zero in principle but continue to push for more granularity on detailed plans on how this will realistically be achieved. My concern is that these goals were set without any structured method to achieve them. As we edge closer to the deadline, I am increasingly sceptical about being able to realistically achieve decarbonisation according to the Government’s proposed timeline.

In our opinion, the Government’s plan is one of short-termism and appears to rely heavily on the altruism of consumers and retailers. Consumers and retailers are generally supportive of decarbonisation and decreasing our reliance on fossil fuels, but unfortunately, certain economic realities preclude their ability to act on this.

Electric vehicles (EV) are more expensive to purchase than their internal combustion engine (ICE) counterparts and rely on a charging network that does not credibly address concerns of range anxiety. Furthermore, consumers must endure longer waits to charge up their EVs, with demand for Electric Vehicle Charge Points (EVCP) exceeding capacity. There are currently 32 EVs per EVCP, with the European Union’s Alternative Fuel Infrastructure Directive recommending at least 10 EVs per EVCP.

There is also the issue of taxation: the tax incentives associated with EVs are heavily promoted by the Government, such as the money saved by not having to pay fuel duty. In the short-term, this is a good idea and may persuade some of those on the fence. In the long-term, it is fiscally irresponsible and unrealistic. EVs put more strain on the existing road infrastructure due to their increased weight and the Government will have to contend with the decreased revenues from fuel duty and VAT on fuel. Subjecting them to vehicle excise duty (VED) was the right move, but the Government will have to carefully consider their ability to replace much-needed revenue streams if their hope of an increase in EVs is to be realised.

From the perspective of many of our members, particularly the smaller retailers, the Government is yet to make a strong business case for the installation of EV infrastructure. Larger retailers are able to put up the capital to make these investments initially but will still be looking to the Government to provide more support, especially in simplifying the installation of key infrastructure by reducing the bureaucracy associated with Local Authority and distribution network operator (DNOs) regulations.

One area of particular concern was a previous Government suggestion to mandate the installation of EVCPs for “large fuel retailers”. This once again ignored a basic reality: a resilient EVCP grid reduces range anxiety, meaning that EV owners will be able to get from A to B without worrying that they will not be able to charge their car. This requires a strategic rollout of infrastructure, with the size of forecourts being a totally irrelevant variable in that equation.

The threat of mandating anything is also a worrying proposition. Would the Government be supporting retailers with the cost? How far would the Government be allowed to go with these powers? The key to ensuring a resilient EVCP network is an effective partnership between Government and private enterprise. The Government should be supporting private actors as they work to meet Net Zero targets, and not threaten them with mandates when unrealistic goals are not being met. Rather than mandates, the Government should include roadmaps with realistic and achievable targets.

While the Net Zero goals may be politically popular, they are unrealistic. They suggest an absolutism that only a total uptake of EVs can achieve Net Zero. While this may ultimately be a goal further down the line, the Government should carefully consider the efficacy and ability to achieve this mandate, given the substantial delays that are already occurring.

I would suggest considering an alternative approach in which the carbon intensity of fuel supplied is gradually reduced until a complete phaseout of fossil fuels is achieved. This would encourage the use of renewable fuels and would present a pragmatic case to motorists and fleet operators. Most importantly, this option is realistic.

Indeed, this point is acknowledged by the Transport Select Committee’s report, fuelling the future: motive power and connectivity, which notes that:

“The huge potential for sustainable fuels to provide a low-carbon options for conventional engines must be explored. Reducing greenhouse gas emissions right now by using increasing quantities of drop-in sustainable fuels would enable us to address the existing fleet and minimise cost and carbon emissions through the use of existing infrastructure.”[1]

I would like to reiterate the PRA’s support for the pursuit of decarbonisation and the move towards Net Zero, but I do not believe it is achievable given the current unrealistic targets and the Government’s failure to provide clarity and support where it is needed. The failure to consider a more realistic approach may leave us with the worst of both worlds in 2030, having not come close to meeting our targets and with no viable path forward as China, the European Union and the United States surpass us.

I would be happy to meet to discuss this response, and my thoughts on the path to Net Zero further, should you find that useful.

Questions

Government approaches

1. What are the main obstacles to the achievement of the Government’s 2030 and 2035 phase-out dates? Are the phase-out dates realistic and achievable? If not, what steps should the Government take to make the phase-out dates achievable?

PRA members remain committed to achieving the Government’s Net Zero agenda, but unfortunately, there are several obstacles to realistically achieving this. The Net Zero plans have been criticised as vague and unrealistic, with the 2030 and 2035 goals phase out date goals without a realistic roadmap outlining realistic, tangible and achievable interim targets during this process.

A 233% increase in monthly EVCP installations is needed to achieve the 300,000 target.[2] The reality is that the infrastructure necessary to accommodate the phase out is far behind schedule and does not show signs of increasing to meet the demand. The job is being largely left to private enterprise and will need more support from the Government.

The forecasted energy requirements to power this change would require an increase in electricity production from 334 terawatts per hour to 434 terawatts per hour[3], with no existing plans or methods on how the Government intends to achieve this. Indeed, the Transport Committee has notes that the Government’s technology agnostic approach “has led to a lack of investment in alternative decarbonisation technologies by the private sector. A more nuanced approach to increasing the uptake of alternative fuels is required.”[4]

There is also the issue of a business case for retailers: while PRA members are doing their best to accommodate this new infrastructure, certain financial realities are making the transition difficult. Smaller retailers may not be able to afford it, given that we are told by some of our members that the return on investment is roughly eight years, and some may not even have the space necessary to install it, such as forecourts in London.

The Transport Committee also highlights the danger of ‘putting all its eggs in one basket’ with battery EVs:

“While maintaining an official line on technology neutrality with respect to achieving zero emissions in private cars, the Government is in fact ‘putting all its eggs in one basket’: battery EVs. The reality is that not everyone in the UK can afford a new or second-hand electric vehicle, and if they could, cannot easily charge one at home. The infrastructure is not adequate to deliver sufficient electricity to homes, and there are insufficient raw materials to produce the battery banks needed for all vehicles to be EVs. We therefore caution against the promotion of electric vehicles as being the only solution to reducing carbon emissions from private vehicles; as the cliff edge of 2030 (2035, 2040 and 2050) approaches and minds are concentrated, reality will bite.”[5]

2. Do the 2030 and 2035 phase-out dates serve their purpose to incentivise the development of an EV market in the UK? To what extent are car makers focusing on one date or the other? What are the impacts of the deadlines on the ability of the UK supply chain to benefit and how could the Government seek to further support the development of the UK EV industry? Would the introduction of a plan with key dates and timescales support the development of the EV industry in the UK?

3. What specific national policies, regulations or initiatives have been successful, or have hindered, EV adoption to date? Are these policies or initiatives fit for purpose?

4. Given that the Government should apply a behavioural lens to policy—which involves people making changes to their everyday lives, such as what they purchase and use—is there a role for clearer communication of the case for EVs from the Government? If so, who should take the lead on delivering that?

We don’t believe consumers need further information pertaining to the case for EVs. The salient points are already well documented. The case for EVs to consumers is quite clear: most consumers would purchase EVs if they could, but cost barriers and range anxiety still loom large for many. The Government does not need to worry as much about communicating the benefits, but rather demonstrate that their plans to improve the relevant infrastructure and help make EVs more palatable from a cost perspective. Doing so would alleviate consumer concerns and help the uptake of EVs.

5. What is your view on the accuracy of the information in the public domain relating to EVs and their usage?

6. What are the overall environmental benefits that would result from achieving the 2030 and 2035 targets?

7. What are the likely costs that will be faced by consumers as a result of the Government’s phase-out dates for non-zero emissions vehicles? Are there policies or initiatives that the Government could use to specifically target barriers arising from unpredictable costs to the consumer, for example significant fluctuations in the cost of electricity, changes to road taxes, or the introduction of low emission zones?

The areas highlighted above require clarity for all members of the EV supply chain. From a retailer perspective, the clarity concerning the cost of electricity will be crucial, given that many of them are already operating on razor thin margins.

From an infrastructure perspective, while the introduction of the VED on EVs was a step in the right direction, the Government will also have to forecast the impact that EV uptake will have on the revenue received by fuel duty and VAT on fuel. EVs are heavier than ICE vehicles and will put more pressure on the road infrastructure. Given that tax incentives are one of the Governments’ main arguments for EV uptake, the revenue deficit will have to be carefully considered.

Low emission zones work well in theory, but one only need look at the example of London to see that any low emission zone must be accompanied by the requisite infrastructure to accommodate an uptake on EVs, and a (significant) improvement of public services. One cannot exist without the other. If the Government wants people to stop driving ICE vehicles, they must offer a viable alternative by improving access to public transport, as well as making it more affordable. The implementation of low emission zones might raise revenue over the short-term, but without corresponding EV infrastructure and public transport, it will increasingly price people off the road, starting with those in lower socio-economic brackets.

To reiterate, the PRA is supportive of low emission zones in principle, but not without the corresponding improvements in public transport and EV infrastructure. The Government cannot take with both hands while expecting consumers and retailers to bear the cost burden.

The volatile energy pricing in the last two years was not something that the original architects of Net Zero could have predicted. Nevertheless, it is important that retailers are not subjected to an OFGEM type regulator. Doing so would represent a significant Government intervention in a market that is able to self-regulate through competition.

EV Market and Acquiring an EV

8. What are the main routes for acquiring an EV? Which aspects of these routes are working well, and which aspects could be improved?

9. What are the main consumer barriers to acquiring an EV, either through purchasing, leasing, or other routes?

Cost of the vehicle, ability to charge at home, a credible and working national charging infrastructure, which can lead to range anxiety are the main barriers to an increase in consumer uptake of EVs.

10.                     How is the Government helping to ensure that EVs are affordable and accessible for consumers, and are these approaches fit for purpose?

Government policy ignores a basic economic reality: consumers will be environmentally responsible where they can but will be concerned first and foremost with cost. If the Government wants people to buy EVs, they must make an economic case for it: EVs must be as expensive or cheaper than their ICE counterparts. The scrappage scheme in London unfortunately serves as a bad example of this policy. A £2000 rebate for swapping in an ICE vehicle is a fraction of the price of an EV. A policy that realistically incentivises people to trade in their ICE vehicles for EVs would make an economic case for the switch, rather than the Government having to rely on altruism and individual support for the Net Zero strategy.

Methods of taxation should be carefully considered before being offered as reasons to buy an EV. Tax breaks on fuel duty and VAT are good incentives in the short term, but over the long term the Government will have to contend with a shrinking revenue base (lack of revenue from fuel duty and the absence of a road charging scheme) as EVs are increasingly used and doing more damage to the nation’s roads.

11.                     Do you think the range of EVs on offer in the UK is sufficient to meet market needs? Which segments are under-served and why? Why is the UK market not seeing low cost EVs, particularly in comparison to China?

12.                     What is the future role of L-segment and personal light electric vehicles, and how will that impact car ownership and usage? What is inhibiting their uptake?

13.                     What is your assessment of the current second-hand EV market? How is the second-hand EV market projected to develop between now and the phase out dates?

14.                     What is the relationship between EV leasing and the second-hand market and how do they interrelate?

15.                     What barriers are there to achieving a sufficient supply of second-hand EVs, mindful that second-hand vehicles make up a high proportion of all vehicles purchased?

16.                     What is the value and role of alternative transport models such as car clubs and micro mobility vehicles in the Government achieving the 2030 phase out date, and how should the Government consider their roles and opportunities for use in transport decarbonisation?

17.                     Are consumers charged higher rates of insurance for an EV when compared to an internal combustion engine (ICE) vehicle, and if so, are these higher rates justified? Can the Government do anything to mitigate this?

Experience of using an EV

18.                     What are the main challenges that UK consumers face in their use of EVs?

Lack of EVCPs is a prominent issue, with range anxiety often being cited as a reason against purchasing. There is also the issue of charge wait-times, where consumers could realistically expect to fill their battery at a minimum of 15 minutes, compared to the fraction of the time it takes to fill up an ICE.

19.                     What are the main benefits that UK consumers could realise from using an EV?

At present, the tax incentives are the main benefit, but as previously mentioned this is not a viable long-term strategy to encourage uptake.

20.                     How prepared are car dealerships, service networks, repairs and maintenance organisations, breakdown services and aftermarket suppliers to meet the growing EV uptake?

21.                     How does the charging infrastructure for EVs need to develop to meet the 2030 target? Does the UK need to adopt a single charging standard (e.g., the Combined Charging System (CCS)) or is there room in the market for multiple charger types?

As previously mentioned, the Government has largely left EVCP infrastructure in the hands of private enterprise. While this is encouraged, the current infrastructure targets are not being met, with a 233% increase needed to meet the necessary goals. The Government cannot expect private enterprises to bear this burden alone and will need to do more to support them.

Charger types should be as simple as possible and be compatible with all EVs. Failure to do so would only add more pressure on retailers’ infrastructure concerns and increase range anxiety.

The customer experience also needs to be improved. The Government must consider factors such as the consumer’s ability to reliably know where functioning EVCPs are and if they will be able to access them in a timely fashion.

22.                     The Government recently published the draft legislation of “Public Charge Point Regulations 2023”. What assessment have you made of the draft legislation text, and what contribution will it make in ensuring the charging experience is standardized and reliable for consumers?

23.                     What assessment do you make of the requirements set out in the draft legislation of “Public Charge Point Regulations 2023” for charge point operators to make data free and publicly available, and how may this improve the EV charging experience for consumers?

24.                     In terms of charging infrastructure, are there unique barriers facing consumers in areas of low affluence and/or multi-occupancy buildings, such as shared housing or high-rise flats? Do you consider public EV charging points to be accessible and equitable compared to home-charging points? What can be done to improve accessibility and equitability?

25.                     Is there a financial benefit to the consumer of choosing an EV over an ICE vehicle? Are there further benefits, aside from financial, that a consumer may gain from EV use?

End of life disposal of EVs

26.                     What options are there for consumers for end-of-life management of batteries and EVs, and what impact does this have on consumer attitudes towards buying an EV?

27.                     What are the current regulations and responsibilities of disposal and recycling for EVs, and how effective are they? How much of the battery can be recycled from a technical standpoint, and how much of that is economically feasible?

28.                     Is there a risk that the residual value of EVs may be lower than the value of the EV as a source of recoverable critical minerals, and how might this effect the flow of EVs into the second-hand market?

National and regional issues

29.                     What are the challenges or concerns around grid capacity in relation to significantly increased EV adoption?

The forecasted energy requirements to power this change far exceeds the grid’s current capacity, with no existing plans or methods on how the Government intends to achieve this.

There is also the previously mentioned issue of filling the taxation revenue left in the wake of declines in Government revenue from fuel duty and VAT on fuel.

The Government must provide clarity and a roadmap with tangible interim targets by which to measure progress.

30.                     What is the role of distribution network operators in ensuring EV infrastructure can be rolled out sufficiently to meet 2030 target?

The Government and DNOs need to be on the same page, with the Government supporting them where possible and not the other way around. This private/ public partnership is crucial to ensure the development of the EVCP network, increasing and improving grid capacity as we approach the Net Zero deadlines.

DNOs and Local Authorities must harmonise regulations across all areas to reduce the bureaucratic burden faced by retailers installing EVCPs. If the Government is serious about achieving these goals they must ensure they do get in private enterprises’ way with undue red tape.

31.                     What are the requirements, challenges or opportunities for the development of public charge point delivery across the UK? How will the development of EV charging infrastructure in the UK interact with existing planning regulations?

Local Authorities must have harmonised guidance in the provision of planning application permission for EVCP sites. Failure to do so will see infrastructure improvement in some areas and not in others, with the deciding factor being the competence of local politicians. EVCP installers need clarity as they improve the grid across the country and should not be unnecessarily slowed by the bureaucracy that would come from difference regulations in different areas.

32.                     What are the issues facing rural residents, urban residents, and sub-urban residents and how do they differ?

Rural residents will be more susceptible to range anxiety, especially if they are unable to charge their cars at home. This further highlights the importance of a strong, resilient forecourt network across the country.

Conversely, residents in urban areas may suffer from the high demand not matched by the adequate EVCP infrastructure to accommodate it. This is why the infrastructure rollout must be drastically increased to meet targets ahead of 2030, if the Government is serious about achieving their goals.

33. What role do you see local authorities playing in the delivering the 2030 phase out target, particularly in relation to planning regulations, charge points and working with District Network Operators? How can government best support local authorities in their roles?

As mentioned before, Local Authorities must have harmonised guidance for the provision of planning regulations. Failure to do so will add reams of unnecessary paperwork for EVCP providers and further slow the rollout of much-needed infrastructure.

International perspectives

34. What are the successful approaches to the rollout and uptake of EVs in other countries, and what can the UK learn from these cases?