A new programme of grants, planned for April 1, will be delayed for months or possibly years because EC officials say they could infringe rules restricting state aid when it is felt financial support might give some manufacturers an advantage over their rivals.
It emerged in December that the scheme was being scrutinised by EC competition division officials (Fleet NewsNet, January 6).
Since then an industry meeting was told of the scale of the problem. One carmaker executive said after the meeting: ‘It looks as though the delay will be at least six months but possibly much longer.’
Keith Johnston, of GoinGreen, which sells electric vehicles for use in London, said: ‘If the delay lasts nine months, we will probably go out of business.’
The existing programme – which has failed to cut transport CO2 emissions – cannot be extended and manufacturers expect fresh orders for LPG and other alternative fuel vehicles to grind to a halt from April if grants are unobtainable.
There is also frustration inside the DfT over the delay because the department is trying to meet Government targets to cut CO2 emissions.
One is a 20% reduction in CO2 by 2010 – another that 10% of new cars sold by 2012 must emit less than 100g/km of carbon.
Anger over the delay was voiced at the year’s first stakeholder meeting hosted by TransportEnergy, a division of the Energy Saving Trust, which distributes grants on behalf of the DfT. There was already concern because the 2005/06 grant budget is £24m, £2m less than the current financial year. A fresh schedule of grants has been outlined by Transport Energy, but awaits Government approval.
Grants cannot be made retrospectively. Executives from vehicle builders at the meeting asked whether the delay was a deliberate ploy to scupper the grant programme and, if not, when payments could be restored.
They said stability in the grant programme was essential if manufacturers were to invest in new models. The SMMT has welcomed a three-year commitment by the DfT for grants to the cleanest vehicles, regardless of technology.
Grant plan should aid up to 15,000 vehicle sales
THE Energy Saving Trust will do its best to maintain market credibility and confidence during the delay in implementing the 2005/06 grant programme, Richard Tarboton, head of the TransportEnergy business unit, told the meeting.
‘You must consider the impact it will have on your businesses,’ Tarboton said.
‘We realise vehicle manufacturers need a long-term commitment when they are planning models 10 years ahead. We will, though, be limited in the long-term in the grants we can give.’
Tarboton said CO2 emissions from transport had not declined over the past five years, remaining at roughly 32m tonnes a year – 22% of the country’s total carbon emissions.
The 2005/06 grant plan is intended to aid sales of between 10,000 and 15,000 vehicles, compared with 5,000 to 6,000 a year under the existing PowerShift programme. Two grant options await DfT approval: