The transport system connects people to places, and businesses to markets.  It is fundamental to our economic strength and quality of life.  Greenhouse gas emissions from transport represent 21% of the UK’s total domestic emissions, and 92% of these transport emissions comes from road vehicles. The only sustainable future for transport lies in a transformative shift to low carbon. The UK Government will support the automotive industry to develop the best technological solutions.

The UK strategy for making the shift to low carbon vehicles in the UK is based on the following five goals:

1. Supporting the automotive industry through the downturn for a successful transition to a low carbon future.
2. Securing the future competitiveness of the UK automotive industry by enhancing its reputation as a leading location for research, development and demonstration of ultra-low carbon vehicle technology.
3. Creating a viable environment to support the adoption of ultra-low carbon vehicles in lead cities and regions, including investment in the skills base.
4. Making ultra-low carbon vehicle solutions competitive for consumers by helping to reduce the costs of these vehicles.
5. Demonstrating clear and strategic Government leadership and smarter coordination of public sector activity.

A number of major policies including funding to support the development of low carbon vehicles, framework for transport tax and new vehicle emission standard are being taken forward to achieve the above goals.

1. Funding to support the development of low carbon vehicles

• £250 million has been allocated to support early adoption of electric and plug-in hybrid cars.  The majority of this funding will be used from 2011 to reduce up-front costs of early electric and plug-in hybrid cars by between £2,000 and £5,000.
• Up to £20 million, supplemented by up to a further £10 million from the Low Carbon Strategic Investment Fund, will be available from 2010 through a new scheme “Plugged-in Places”
• £140 million has been allocated to the Technology Strategy Board’s ‘Low Carbon Vehicle Innovation Platform’ which brings together funding from across Government to support research, development and demonstration of low carbon vehicle technologies.
• The Government called on the European Investment Bank (EIB) to double its financial support for the next generation of greener cars by making available €8 billion over the next two years. The EIB subsequently announced a doubling of its Clean Transport Facility in December 2008.
• Incentive schemes have been established to support the bus industry to shift to low carbon bus operation.  Bus operators that have improved their fuel efficiency by at least 6% over the previous two years will receive a 3% increase in their Bus Service Operators Grant rate and that operate buses emitting at least 30% less greenhouse gases than similar sized Euro III buses will receive an additional 6 pence per km.
• Up to £30million over 2009/10 and 2010/11 is invested in low carbon bus technology.

2. A long-term framework for transport tax

A number of changes in the transport tax system has been announced to facilitate the transformation to low carbon transport.  These include:

• An increase in main fuel duty by 2 pence per litre from 1 September 2009 and by 1 pence per litre in real terms on 1 April each year from 2010 to 2013.
• The number of vehicle excise duty (VED) bands will be increased from seven to thirteen. This will provide a greater incentive for drivers to choose a lower carbon version of car within their preferred class.  
• Electric vehicles will not need to pay fuel duty or VED.
• Company car tax is now based on carbon emissions.
• The Euro V vehicle emissions standard for new heavy goods vehicles will become mandatory on 1 October 2009. Measures to incentivise the choice of Euro VI will be introduced.
• Providing information is important to help consumers choose low carbon vehicles and fully utilise these incentive schemes.  An online database providing van CO2 emissions and fuel consumption data was launched in June 2009.  The fuel economy label for new cars originally launched in 2005 will be updated and similar label will be developed for used cars.

3. Vehicle emissions standard

• The EU’s New Car CO2 Regulation sets emission targets of 130gCO2/km from 2012, with full compliance by 2015, and 95gCO2/ km by 2020.  This 2020 target means a 40 per cent emission reduction comparing with 2007 level.
• Vehicle procurement in central government departments and their agencies will meet the EU ‘s 130g CO2 /km by2010 standard well ahead of schedule of the EU’s targets.
  

Reference:

Low Carbon Transport: A Greener Future

Ultra-Low Carbon Vehicles in the UK

UK’s Budget 2009: Building a low- carbon recovery

The UK Low Carbon Transition Plan