Written evidence submitted by Environmental Defense Fund Europe (CGE0042)

1. Introduction

Environmental Defense Fund Europe (EDFE) welcomes the opportunity to comment on the above-captioned inquiry.  As discussed more in detail below, we believe that transformation of the transportation sector is critical to achieving climate targets and suggest a number of areas of focus for further development. 

About Environmental Defense Fund Europe

Environmental Defense Fund Europe (EDFE) is an affiliate organisation of Environmental Defense Fund (EDF), a leading international non-profit organisation which, since 1967, has used a unique combination of science, economics, law and data to find solutions to the most pressing environmental problems. We employ more than 650 people worldwide and work closely with academics and researchers from numerous international institutions. We do not accept funding from corporations, so our entire budget comes from individuals, foundations and a limited number of government grants.

Environmental Defense Fund Europe works collaboratively across the political spectrum and with the private sector. We bring a pragmatic outlook to environmental challenges, focusing on issues where we can see clear market and regulatory failures and where we believe solutions can deliver impact at scale.

2. Response to Consultation

Executive Summary

• Of all sectors that the Clean Growth Strategy focuses on, transport has made the least progress since 1990, and has the greatest potential for rapid decarbonisation, and as such should be prioritised.
• Electric vehicles provide an opportunity to decarbonise the UK’s road transport, and strengthen the UK’s economy.
• Current policy in the Clean Growth Strategy and Road to Zero Strategy is insufficient to promote supply and uptake of electric vehicles, and should be supplemented with a zero emissions sales target
• Technologies that will provide potential for electric vehicles to further decarbonise transport include: infrastructure for electric vehicles, variable tariffs on charging, vehicle-to-grid technology and optimised charging based on grid carbon intensity to reduce emissions and help balance the grid.

The lack of progress in electrifying transport has a detrimental impact on reaching carbon targets.

1) The transport sector must be decarbonised. We agree with the statements in the Executive Summary of the Clean Growth Strategy that transport is one of the key sectors from which emissions reductions must come, and the acknowledgement that “accelerating the rollout of low emission vehicles contains a triple win for the UK in terms of industrial opportunity, cleaner air and lower greenhouse gas emissions” (p.11). However, the policies contained within the Clean Growth Strategy do not match the level of urgency with which emissions from transport must be reduced in order to meet our carbon budget targets, nor do they match the level of opportunity afforded by a rapid transition to clean transport in the United Kingdom.

2) The lack of progress in reducing emissions from transport. Reducing emissions of greenhouse gases from transport should be the top priority for the Government. The Department for Business, Energy & Industrial Strategy (BEIS) emissions data published since publication of the Clean Growth Strategy confirms that in 2016 transport was the most emitting sector in the UK, emitting 126 MtCO2e in 2016, only 2 MtCO2e less than in 1990. In comparison, between 1990 and 2016 emissions from residential housing have decreased by 10 MtCO2e, from business by 33 MtCO2e, and from power by 158 MtCO2e. Of the emissions from transport, road transport was the source of 91% of emissions, (24% of the United Kingdom’s total emissions, up from 16% of the UK’s total emissions in 1990)[1]. This increased percentage indicates the extent to which decarbonisation of transport is lagging behind other sectors; a result of the increase in vehicle miles outweighing the improvements in vehicle efficiency.[2] The Committee on Climate Change (CCC) has assessed that “the cost-effective path to meeting future emission reduction targets includes a reduction in transport emissions of 46% from 2017 to 2030”[3], making it clear that transport should be the key priority, given the lack of progress since 1990.

3) The role of electric vehicles in meeting carbon budgets. Despite the lack of progress until now, there is significant opportunity for emissions from road transport to fall dramatically, in particular through a transition to use of battery electric vehicles at a large scale. The CCC has assessed that to deliver a cost-effective path to meet our fifth carbon budgets, around 60% of sales of new cars and vans would have to be electric by 2030.[4] The Government in the Road to Zero Strategy declares that it “want[s] to see at least 50%, and as many as 70%, of new car sales being ultra low emission by 2030,”[5] and in the Clean Growth Strategy a key goal is a phase out of sales of conventional petrol and diesel cars and vans by 2040. Notwithstanding that these are all targets set out prior to the publication of the IPCC’s Special Report on Global Warming of 1.5ºC[6] and the CCC’s review of targets and carbon budgets in the Climate Change Act 2008, current sales do not indicate that we are on track to meet any of these targets: sales of battery-electric or plug-in hybrid vehicles in 2018 have been 2.3% of new vehicle sales, only 0.5% higher than in 2017.[7] Fully electric vehicles make up only 0.6% of total sales.[8] Furthermore, from January to September of 2018 (a period which in 2017 made up 81% of sales of new vehicles) there were only 45,000 sales of electric vehicles, less than half of the CCC’s indicator of 98,000 sales in 2018,[9] strongly suggesting that we are not on target to meet the CCC’s indicator. The Clean Growth Strategy and the Road to Zero Strategy both fail to present any policies that will provide a serious pathway to achieving their high ambitions for sales of electric vehicles, and the upcoming reduction in the plug-in grant[10] may slow growth of sales further. In order to decarbonise transport for the fourth and fifth carbon budgets, further policies should be considered.

4) Electric vehicles and the ‘Clean Growth Grand Challenge.’ Electric vehicles provide an opportunity not only to extensively decarbonise transport, but also for the United Kingdom to become a world-leader in zero-emission technology. Analysis by Vivid Economics suggests that in the case of an ambitious phase-out of sales of internal combustion engine vehicles in 2030, the UK could provide 47% of sales of electric vehicles in Europe in 2030[11], and assess the UK automotive sector to be well suited to a shift towards the production of electric vehicles, as “69% of [Gross Value Added] comes from the assembly of vehicles,” rather than being locked into manufacturing internal combustion engines.[12] The Clean Growth Strategy’s emphasis on providing funding for innovation, for example through the Faraday Institution, is therefore welcome. However, we agree with the CCC’s warning that Government support for R&D alone may fail to help the UK meet its fourth and fifth carbon budgets, as “lead-times, particularly for UK supply chains, mean that clarity is required soon in order to drive the necessary investments.”[13] To complement R&D investment, a committee of MPs has found the government “needs to promote investment in this new technology by clarifying and increasing the ambition of its sales targets.”[14] To be successful, the Clean Growth Grand Challenge must ensure that electric vehicles are supplied in the UK: recent work by Transport and Environment has shown that there are long waiting lists for electric vehicles in Europe, even while automakers spend little on advertising.[15] At the same time, investment by European car manufacturers is seven times higher in China, which requires that automakers meet emissions-related sales targets, than in Europe.[16] There is increasing evidence that the most effective method for governments to encourage automaker investment in and supply of electric vehicles is through not just demand-side policies, such as financial support for purchases, but also through policies that target supply. Zero emissions sales mandates, such as have been put in place in North America and China, and are being proposed in EU legislation,[17] would help to secure the future of the United Kingdom’s automobile industries, allowing investors to plan with confidence for a new market. Indeed, research has found mandates to be an effective policy for increasing supply of electric vehicles in the short to medium term, without requiring heavy government expenditure.[18] The Clean Growth Grand Challenge should incorporate sales targets for zero emissions tradeable credits in order to support the deployment of electric vehicles, which will help to achieve both the UK’s goals of reducing emissions from transport, and leading the world in the design and manufacture of zero emissions technology.

Further development in technology will be needed to maximise the benefits of electric vehicles.

5) Technological Readiness. In order for electric vehicles to scale to levels sufficient to enable achievement of important carbon targets, certain technological developments are required in order to ensure these vehicles represent a viable alternative to internal combustion engines and are effectively integrated into the grid.  To that end, the following should be considered: installation of appropriately situated charge points in order to alleviate range anxiety; more broadly available tariffs to encourage charging that helps to integrate renewable energy; and further exploration of vehicle-to-grid (V2G) capabilities.  EDFE discusses each in turn below:

6) Development of infrastructure. It is clear that sufficient infrastructure is needed in order to drive the EV market.  As the recent report from the BEIS states, the “[charging network must be far-reaching and convenient if drivers are to be convinced that EVs provide a serviceable alternative to petrol and diesel vehicles; drivers will not switch to EVs, even when price parity with petrol and diesel is reached, if they are not confident that they can change their vehicle in local areas and on major roads.”[19]  Though the Automated and Electric Vehicle Act focuses on public charging stations mainly on motorways,[20] that should not be the only area of focus in order to spur adoption; people must have the ability to charge at work, at home and at destinations, since those locations will be where the vast majority of charging sessions will take place.  In addition, the type of charging station must be mindfully considered – while slower level 2 charging stations are appropriate for residences, workplaces, and other long-dwell locations, more rapid charging is likely appropriate for, as an example, chargepoints located on highways. 

7) Time-variant rates. Of key importance is utilisation of electric vehicles in a way that helps to integrate renewable energy and minimises burden on the grid. National Grid anticipates that there will be excess renewable energy available at certain times of the year[21] that electric vehicles can help to integrate through managed charging.  If prices encourage charging at times when there is available or excess low carbon power, the emission reduction potential of electric vehicles can be maximised, and can aid in increasing grid reliability. In addition, well-designed tariffs that actually influence managed charging could reduce the anticipated need for infrastructure build-out as a result of increased electricity load.  A handful of energy providers like Green Energy[22] and Octopus Energy[23] have time-variant tariffs for electric vehicles, but the use or offer of a time-of-use or more dynamic tariff is not mainstream.  EDFE suggests that further exploration of how to make this more widely applicable is warranted.

8) V2G Technology. Finally, EDFE believes further development of V2G technology is prudent. EDFE appreciates that efforts in this area are already underway – as demonstrated by the government’s funding of 21 V2G projects “with the aim of exploring and trailing both the technology itself and commercial opportunities.”[24]  Efforts like these should be continued and potentially expanded, as V2G can provide important flexibility and ancillary services, and reduce system costs.

Conclusion

9) The Clean Growth Strategy’s goals of ‘Accelerating the Shift to Low Carbon Transport’ and ‘Delivering Clean, Smart, Flexible Power’ will both rely on the development of electric vehicles, in particular using batteries. Transport has made little progress in decarbonising since 1990, and makes up the greatest proportion of the UK’s emissions. This is a problem across Europe, as emissions across the EU increased 0.6% from 2016 to 2017, “mostly due to the increase of oil consumption from road transport”[25]. Battery electric vehicles can not only ensure that transport takes place with zero tailpipe emissions, but can also provide ancillary services that may aid an increased renewables share of our energy generation, particularly where tariffs incentivise optimised charging that uses lowest carbon power.  By supporting the development and deployment of electric vehicles in the UK, this Government could provide an opportunity to decarbonise the UK’s road transport, and strengthen the UK’s economy, in keeping with the CCC’s guidance.  However, current policy in the Clean Growth Strategy and Road to Zero Strategy is insufficient to promote supply and uptake of electric vehicles, and should be supplemented with targets for tradeable zero emissions sales credits.

October 2018