Last reviewed 7 June 2023

It is essential that companies have an all-encompassing transport strategy that takes account of government policies to phase out the sale of new petrol and diesel cars and vans by 2030 and for heavy goods vehicles (HGVs) to be zero-emission by 2040.

This article, by John Barwise gives the essential background information on the regulatory requirements governing commercial transport emissions in the UK and why this is necessary. Various options to support the transition to zero emissions vehicle fleets will also be considered.

Transport sector bears heavy burden

The transport sector continues to produce the greatest share of UK domestic greenhouse gases (GHGs) compared to emissions from other sectors, such as energy and business. The latest statistics for 2020 show that, across UK local authorities, transport accounted for 24% of all UK emissions, compared to industry which accounted for 19% of territorial emissions in 2020. 

The biggest contributors were cars and taxis, which made up 52% of the emissions, HGVs contributed 19% of domestic transport emissions, whilst vans accounted for 16% of emissions.

Transport also contributes a substantial portion of air pollutants — around 30% nitrogen oxides (NOx), 14% of PM2.5 emissions, and 12% of PM10 emissions come from transport and all have a detrimental impact on human health. In 2020, a coroner made legal history by ruling that air pollution — mainly nitrogen dioxide and particulate matter (PM) from transport was the principal cause of the death of a nine-year-old girl.

On a more positive note, both GHG emissions and some air pollutants from transport have declined in recent years, largely through technologies that have improved fuel efficiency. Sales of electric and hybrid vehicles have also risen in recent years — 15.4% of all new car registrations were electric vehicles in April 2023.

But transport emissions from burning fossil fuels remain dangerously high, both in terms of the impacts on human health and the effects on global warming. Without a planned phase out of petrol and diesel vehicles, the UK is unlikely to achieve net zero ambitions by 2050.

Electric vehicles defined

An electric vehicle (EV) is generally defined as a vehicle that uses electric motors to drive the wheels. There are broadly four different types:

  • Battery Electric vehicles (BEVs) — uses an electric drive system where the battery is the only power source.

  • Plug-in Hybrid Electric Vehicles (PHEVs) — can switch between running on electricity or fossil fuels.

  • Hybrid Electric Vehicles (HEVs) — combines an internal combustion engine and an electric motor, where the battery is charged while driving. Vehicles can drive in electric mode for only a few miles. HEVs do not plug in to charge the battery.

  • Fuel Cell Electric Vehicles (FCEVs) — uses a fuel such as hydrogen that transforms the chemical energy into electrical energy which powers the vehicle’s electric motors. Refuelling is similar to a petrol or diesel vehicle. Unlike fossil fuels, exhaust emissions are mainly water.

Legal and other requirements

The UK Government is legally bound to achieve net zero GHG emissions by 2050, based on 1990 emissions. Reducing transport emissions is essential in achieving this ambition. Key initiatives include the following.

Phase out of petrol and diesel cars and vans

The Government recently announced a new mandate requiring manufacturers to progressively increase their percentage of new zero emission vehicle (ZEV) sales. A ban on the sale of new petrol and diesel cars will come into effect from 2030, with the sale of hybrids being outlawed from 2035.

As part of the transition, the Department for Transport (DfT) has outlined proposals for a ZEV mandate, setting legally binding targets for 22% of manufacturers’ new car sales to be zero emission vehicles (ZEVs) in 2024, rising to more than 33% in 2026 and 52% in 2028. The Government’s planned schedule is for all new cars and vans be fully zero emission at the tailpipe from 2035. Even hybrids will be banned from sale in new car showrooms from 2035 — five years after petrol and diesel vehicles.

Zero emissions HGVs

All new HGVs less than 26t must be zero emission from 2035 and all HGVs greater than 26t must be zero emission from 2040, subject to further consultation on how regulations will impact this sector. Carrying heavy loads over long distances requires large batteries or large fuel cells and suitable infrastructure which, combined with the logistics of moving freight around the UK, makes the transition to zero or low emission HGVs challenging.

The Government’s Future of Freight: a long-term plan, developed in partnership with industry, sets out how the UK can deliver a cost-efficient sustainable freight sector for the long term, including a £7m Freight Fund to maximise the use of technology across freight and logistics.

Clean Air Zones (CAZs)

The Environment Act 2021 — strengthens the Local Air Quality Management framework and requires a number of local authorities to introduce Clean Air Zones (CAZs) , as a way of reducing public exposure to pollutants such as nitrous oxide (NO2) and particulate matter.

CAZs are grouped into classes covering different vehicle types for which restrictions and charges are applied (with some exceptions) – heavy polluting vehicles pay more. There are currently 9 towns and cities in England where CAZ charging applies, with Greater Manchester currently under review. Glasgow has just launched its Low Emissions Zone — others are planned. Each city has its own emissions charging regime for each vehicle type.

London has two zones designed to restrict the use of more polluting vehicles - the Ultra-Low Emissions Zone (ULEZ) covers an area up to the North and South Circular roads and the Low Emission Zone (LEZ) extends across most of Greater London. Most vehicles need to meet the ULEZ emissions standard or pay a £12.50 daily charge to drive inside the zone. Vehicles over 3.5 tonnes) and buses, over 5 tonnes will need to pay a LEZ charge of £100 or £300 per day if they do not meet the LEZ emissions standard. Check on the Transport for London (TfL) website.

The direction of travel for zero emission vehicles

Under the Government’s proposed ZEV mandate, the sale of new petrol and diesel cars and vans will end from 2030, electric and hydrogen-powered HGVs will take over from traditional diesel-powered trucks by 2040.

The transition is already underway. In March, around one in five new cars sold was electric. UK factories turned out a record 234,066 battery electric (BEV), plug-in hybrid (PHEV) and hybrid (HEV) electric vehicles, with combined volumes up 4.5% year-on-year to represent almost a third (30.2%) of all car production, according to the UK automotive trade body, the SMMT.

A growing number of businesses are already switching to ZEVs and others are planning to do the same. Catherine Colloms, Managing Director of Corporate Affairs & Brand at Openreach, said the company has; “pledged to be a net zero business and switch the bulk of our commercial van fleet to zero emissions by 2030.”  

“We have the second largest commercial fleet in the UK and expect to have around 4000 electric vans in our fleet by the end of March 2024.” Colloms added.

According to the Federation of Small Businesses (FSB), 36% of small businesses in accommodation and food services state they have switched or plan to switch all or some of their fleet to zero emission vehicles, whilst 29% in the construction sector state they have installed a workplace charging point for electric vehicles.

For its part, the Government now has 25% of its central fleet being battery-powered, with the aim of decarbonising the entire central car and van fleet to zero emission vehicles by 2027. It has also recently announced a package of measures to support decarbonising transport including:

The Government’s commitment to a ZEV mandate by next year is also welcomed by the four biggest fleet operators — BT and Openreach, Centrica, DPD UK and Royal Mail who have called on the UK Government to commit to 100% electric vehicle (EV) sales by 2030.

Strategic leadership — policies to consider

Directors will need to decide whether it is in the company’s interest to switch to zero or low emission vehicles and, if so, when. For example, companies that decide to retain petrol or diesel vehicles should determine whether the roll out of Low and Ultra low emission charging regimes will be prohibitively expensive.

As part of the decision-making process, directors should also consider the following costs and benefits.

Costs

  • EVs are more expensive than equivalent petrol and diesel vehicles

  • The range of ZEV models available is not as extensive, although the range of options is growing.

  • There are too few public charge points available to meet current demand and the rollout is too slow to meet rising demand, according to the latest data.

  • The Policy Exchange think-tank says the UK will need 400,000 public chargers by 2030, up from 35,000 currently and there are some “black spots” outside London. Transport Secretary Grant Shapps has pledged to spend £1.3bn towards charging infrastructure over the next four years.

Benefits

  • Eliminating tailpipe exhaust will significantly reduce GHG emissions and help combat climate change.

  • Reducing exhaust pollution will reduce the impact on human health.

  • Electric cars are liable for zero annual vehicle excise duty unlike most petrol and diesel vehicles.

  • EVs are cheaper to run. According to ring consultancy New AutoMotive, the average annual electricity cost of running a popular small EV is approximately £250, compared to around £1210 per year for similar car powered by petrol.

  • EV charge points can be located at home or the workplace.

  • Electric cars offer a better overall performance compared to standard combustion engines and with fewer parts require less maintenance.

Directors should consider undertaking a review of current transport needs including staff mileage of business vehicles, distribution and logistics to determine both short- and long-term costs and benefits of switching to ZEVs.

The Climate Change Committee (CCC) says the full transition to electric vehicles (EVs) is one of the most important actions to achieve the UK’s Net Zero target and has called for all new light-duty vehicles sold, including passenger vehicles, taxis, vans, motorbikes and mopeds, to be fully battery-electric vehicles by 2032.

Overall, the direction of travel is clear — the UK is committed to ZEVs in line with 2050 net zero emission targets. For businesses the transition to ZEVs is inevitable at some point. For directors, the decision is when, rather than if, their company should switch to ZEVs.