Plans for a diesel scrappage scheme for local businesses and low income households have been revealed in a new report.
Van operators would receive £3,500 to scrap vehicles that fell below the Euro 6 standard and have access to a lease guarantor fund to help source a replacement.
Low income households, meanwhile, would be offered £2,000 to dump their car in favour of a mobility package, which would include access to public transport, cycle hire and car club or car rental schemes.
Older, polluting, purpose-built taxis would also be targeted, with a payment of £1,000, in addition to other incentives, to scrap vehicles.
The package of measures, proposed by Transport for London (TfL) and consultants Cambridge Economic Policy Associates, would be delivered over a two-year period and funded, in part, by a temporary 20% rise in Vehicle Excise Duty (VED) on new diesel cars until 2021.
The scrappage scheme would also only be available in the UK’s most polluted cities, where so-called Clean Air Zones (CAZs) will be introduced.
Birmingham, Leeds, Nottingham, Derby and Southampton are required to have a CAZ in operation by 2020, while London could introduce an Ultra Low Emission Zone (ULEZ) from 2019.
The report, which was commissioned by Mayor of London Sadiq Khan, has been delivered to the Government ahead of next week’s Budget.
Khan said: “A national diesel scrappage fund is the cost-effective way to deliver significant emission reductions while reducing the economic impact on those most affected, such as small businesses, charities and low income households.
“For years, Government has incentivised and encouraged people to purchase diesel cars; it is only fair that they now help people to switch to cleaner alternatives.”
The report estimates a scrappage scheme in London would cost up to £515 million, but it is unable to provide a total cost, due to a lack of data from other cities.
Almost half of that cash, some £182m-£245m, would be spent over the two-year period helping between 52,000-70,000 operators in London scrap a pre-Euro 6 van.
The Euro 6 vehicle emission standard has been required for newly registered vans and minibuses since September 2016 (2015 for new models). The Government’s draft CAZ framework proposes that only the latest Euro 6 diesel vans and minibuses are allowed to be driven in a number of UK cities without incurring a charge.
It is estimated around 55% of vans and minibuses driven in London on an average day in 2019 would not comply with Euro 6 standards.
The authors of the report suggest a payment of £3,500 in exchange for scrapping a pre-Euro 6 diesel van would help to bridge the gap for small businesses and charities to buy a compliant vehicle.
However, owing to the timescales, there is likely only to be a limited second-hand market of Euro 6 vans by 2020 and many organisations, even with a cash payment scheme, may find it difficult to source the upfront capital cost for a second-hand vehicle. For example, a Euro 6 van is estimated to cost around £11,000 in 2019.
The report proposes a leasing guarantor fund, allowing smaller operators that may have traditionally outright purchased vehicles to address any creditworthiness issues and lease a new vehicle instead.
The report also suggests Government might consider the interaction between the scrappage payment and plug-in van grants and what additional incentives could be put in place to help switch to much cleaner vehicles.
Support could be provided that is less reliant on the scrapping of a vehicle but rather fleet growth and/or trialling new cleaner vehicles in city centres, including measures to break down barriers related to charging infrastructure. However, this would not be a substitute for the scrappage payment, nor explicitly linked as a condition for payment as businesses will require flexibility.
The British Vehicle Rental and Leasing Association (BVRLA) welcomed the proposals. Gerry Keaney, BVRLA chief executive, said: “There is an urgent need to address pollution in our cities, which requires a change in the way we travel and the vehicles we use.
“We believe the mayor’s proposal for a national vehicle scrappage fund could make a significant contribution in reducing emissions by removing some of the oldest, most polluting vans and cars from our streets.”
TRL - the Transport Research Laboratory - agrees. Denis Naberezhnykh, TRL’s head of ULEV and energy, said: "It will take a significant amount of time to transition a sufficiently large proportion of the UK car parc to ULEVs to have a substantial impact on pollution. Therefore, to yield a more immediate impact, we agree that the government should be considering short and medium term measures to accelerate removal of the most polluting vehicles, in addition to encouraging ULEV take up.
"Diesel scrappage schemes, ultra-low emission zones and revised taxes could all be used and would have a more immediate impact, especially in cites and urban areas. The longer-term aim should be to continue supporting ULEV take-up and targeted deployment of charging infrastructure.”
TRL’s technical manager, air quality and emissions, Dr Tim Barlow, added: “Diesels are very efficient, with low fuel consumption and low CO2 emissions. However, they can produce high quantities of NOx and PM, both of which are of concern to public health, making them unsuitable to urban environments, especially if they are mainly used for short, slow trips.
“Suddenly banning diesel cars and vans would cause hardship for many people and businesses, but there does need to be a plan in place that has plenty of lead time. For example, a good local scheme could be to discourage diesel cars and vans from the area by charging them more on top of any existing fees, such as parking charges or charges to enter an urban area.”
Khan’s call for a diesel scrappage scheme is not new. MPs on the Environmental Audit Committee have previously called on the Government to consider a scheme in an effort to comply with European pollution limits.
The thinktank Policy Exchange also suggested a scheme which would offer £2,000 to motorists who scrap an old diesel car or van and buy a new lower emission vehicle.
However, a Fleet News poll suggests fleets are divided on the merits of a diesel scrappage scheme. Just over 40% of respondents said they believed it would significantly improve air quality.
Professor Toby Peters, visiting professor in Transformational Innovation for Sustainability at Heriot-Watt University in Edinburgh, is not convinced either. He says that before the Government starts spending taxpayers’ money to take diesel cars off the road it should consider two minor reforms that cost nothing and target the vehicles that emit the most.
During ‘dieselgate’, it emerged that the real-world emissions of Euro 6 diesel cars were on average seven times higher than the legal limit. But independent transport refrigeration units (TRUs), the secondary diesel engines used to provide cooling on refrigerated trucks and trailers emit far more.
Peters explained: “Analysis has shown that a TRU emits up to 93 times more nitrogen oxides (NOx) and 165 times more particulate matter (PM) than the emissions limits of a Euro 6 diesel car.”
TRUs are allowed to run on red diesel because they are classed, “bizarrely” according to Peters, as ‘non-road mobile machinery’, even though they operate on a truck or trailer.
He continued: “There is no conceivable economic justification for continuing to subsidise such a mature and highly polluting technology against new zero-emission competitors. Britain is one of only a handful of countries in the EU that still permits this.
“Banning diesel TRUs in London alone would be the PM equivalent of taking more than 300,000 Euro 6 diesel cars off the road. Imagine what replacing 300,000 cars would cost under a scrappage scheme.”
Peters is an advocate of UK-based innovation in energy systems and founder of Highview Power and the Dearman Engine Company. Through these companies, he has established the concept of liquid air to deliver both grid-scale electricity-to-electricity energy storage, and distributed cold and power for applications in transport and the built environment.
He suggests banning all TRUs from Britain’s cities by 2022, giving five years for supermarkets and the food industry to find zero-emission replacements, and, with immediate effect, scrap the red diesel subsidy for TRUs everywhere.
Peters said: “It makes sense to tackle TRU emissions because they are grossly disproportionate emitters, the number of vehicles affected would be small, around 84,000 across the UK, and market-ready zero-emission alternatives are available.”
Analysis of four zero emission TRU technologies - battery electric, hydrogen, liquid nitrogen evaporation, and liquid air cold and power – showed that all bar hydrogen would have lower lifecycle costs than TRUs running on unsubsidised road diesel, but that none could compete with red diesel. “This loophole has to go,” said Peters.