Fleet News

Fresh cashflow blow to green grants scheme

TROUBLED green grants provider PowerShift has been plunged into another industry row after revealing funding has dried up just a month after it recovered from an earlier cash crisis.

Last year, the Energy Saving Trust (EST), which runs the PowerShift grant scheme to help companies pay the extra cost of sourcing alternatively fuelled vehicles, announced it had run out of cash until the end of the financial year 2003-2004 (Fleet NewsNet, March 11).

In April, the Government announced its funding for the next year was being frozen, leading to drastic cuts in the size of grants.

In a fresh setback for fleets, the EST said this month it will not process grants for either PowerShift or the CleanUp scheme for older vehicles until June 1 as it has already used its funding allocation.

The announcement is a severe blow to the scheme, which is trying to persuade companies and fleets to switch to alternative fuels by using the grants system.

This week, Christopher Macgowan, chief executive at the Society of Motor Manufacturers and Traders (SMMT), criticised the funding freeze, saying: 'What are car buyers to do? Will they wait until an administrative window has opened to make a grant application for one of the cleanest alternative fuelled vehicles?

'No, the reality is that many will simply change their buying decision. 'This latest bombshell from EST shows a lack of understanding of how the market works, on top of failing to learn lessons from previous mistakes.

'If Government is serious about the drive to support greener technologies then it had better sort this mess out and quickly.'

However, the Government has already done enough to promote LPG, according to Stewart Whyte, a director at the Association of Car Fleet Operators. He said: 'The technology behind LPG works, the fuel will be cheaper for a few more years and it provides environmental benefits.

'But if this does not persuade people to switch, I do not see why the Government should spend any more time promoting it.'

The EST justified its decision to ration grants claiming it will provide a 'fairer distribution' of funds.

After the scheme ran out of cash last year, a decision has been taken to split all funding into two-month blocks, so that money is available all year round on a first-come, first-served basis.

But the move also means that EST is likely to shut the door on grants applications several more times this year, creating more potential conflict in the industry.

Richard Tarburton, head of EST TransportEnergy, said: 'Changing the processes of grant distribution needs to work for everyone. The decision to implement this system came after careful consideration and consultation with all our stakeholders.

'Our TransportEnergy programmes are proving to be in high demand and this system will help us to allow a fairer distribution of grants across the year.'

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