The government's petrol ban is only half an answer

All cars will need to be clean from 2040 onwards, but where will the electricity come from?

by Adam Gale
Last Updated: 26 Jul 2017

The government’s proposal to ban all petrol and diesel vehicles sounds tremendously bold, almost Earth-savingly so. Finally, you think, someone’s actually doing something to improve our quality of life and safeguard the planet for future generations.

That is, until you see the date of the proposal, which feels like it belongs on the small print of a pre-financial-crisis payday loan.

2040. Really? That’s like promising unlimited money for everyone, to be phased in from 2163. The chances are that no one in the current government will even be in Parliament by 2040. A lot of them will probably be dead – hopefully not having succumbed to the capital's dirty air.

Besides, there’s a strong argument that the transition to low-carbon transport is going to happen by then anyway, as range and performance increase and costs fall.

Given that only 1.5% of new cars registered are electric, that might seem like hype, the kind of thing perhaps you’d find in an Elon Musk tweet. But the signs of a major change are there if you look at the established car manufacturers.

For a long time, says Frederik Dahlmann, assistant professor of global energy at Warwick Business School, it wasn’t clear how seriously the industry giants were taking alternative fuels. But now, driven largely by the enormous investment in the technology coming out of China, they’re starting to hit the gas. There are over a 100 new models in the pipeline, and Volvo recently became the first legacy firm to commit fully to hybrid and electric vehicles.  

‘Western car manufacturers are seeing there’s a lot of money and resource being put into this and they fear they might be losing out. That’s why we’re seeing a lot of momentum, regardless of what governments have been announcing, in France and recently the UK. To some extent, that’s a bit of sideshow,’ says Dahlmann.

The upside

It may seem like this is little more a cynical attempt by the government to convince people of its green credentials, at a time when people are taking it to court over clean air violations. But actually there’s a lot of pragmatism in the proposal.

For a start, it goes the whole way, banning not just the sale of new petrol and diesel cars but hybrids too. And there is some sense to the 23-year wait.

The government couldn’t have banned petrol and diesel very soon without either disadvantaging British consumers (if the UK banned petrol tomorrow but no one else did, would the global car giants immediately re-write their business plans to accommodate us?) or hobbling an enormously valuable sector of our economy. The target of 2040 gives the whole ecosystem, including all the mechanics and dealerships, ample time to adapt.

Car companies aren’t tech giants, after all, no matter what Musk may say. ‘Every model has to planned around seven years in advance, so you need to know now what kinds of production lines have to be in place, what resources, what supply chain agreements,’ says Dahlmann.

While 2040 may be well over 7 years’ away, it still provides a ceiling, a known cut-off point that allows the car giants to plan their strategies for what will be a remarkable transition involving massive investment and a serious hit to their balance sheets as much of their existing assets are written down.  

Besides, because of this long-term view, it’s unlikely any car companies would design new models for the UK after the mid 2030s at the latest, and demand for internal combustion engine vehicles might waver even earlier as people get second thoughts about the resale value of their cars.

Much will also depend on the other regulations that will eventually accompany this announcement. Higher charges for high-emission cars, low emission zones, bigger subsidies for electric vehicles, even diesel scrappage schemes could all have a bigger impact, potentially much sooner than 2040.

The downside

The charging infrastructure – both at home for overnight charging and along motorways and at service stations for long distance travel – will need to improve before consumers will ditch their beloved fossil fuels, something the government will also need to be involved in.

All those electric cars are going to need a lot of juice, which raises a rather important question:  where is all that electricity going to come from? Renewables? Nuclear? Coal? Imports? Some estimates have it that if transport goes fully electric, the demands on the grid will increase 50%.  

This creates both challenges and opportunities, especially when you consider that the ‘wrong type’ of electricity wouldn’t leave electric cars all that low-carbon at all. But the market needs to know what the parameters are before it can invest to meet the new demand in a way that’s acceptable for voters and the planet.

Energy and the environment are one of those cases where the government actually does need an industrial strategy. One would hope that today’s bold announcement will indeed form part of a coherent plan, rather than just a headline-grabbing outlier. 

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