Fleets urged to be open-minded when choosing fuel options for their fleets
Fleet decision-makers are being urged to take a more “open-minded approach” to petrol-engine, hybrid and plug-in cars with diesel vehicles being the prime target of a plethora of new legislation and clean air initiatives.
It is widely expected that diesel’s share of the UK new car market will decline, despite the latest generation of Euro6 engines being widely available.
The reason for diesel demand coming under pressure is:
- Introduction of a network of Clean Air Zones in towns and cities nationwide
- Implementation of the world’s first Ultra-Low Emission Zone (ULEZ) in central London from 8th April, 2019 - 17 months earlier than the previously announced 7th September 2020 start date
- Potential changes - for that read increases - to the tax treatment of diesel vehicles expected to be announced in the Autumn 2017 Budget and signposted in this year’s Spring Budget
The government’s long-term tax plans for diesel vehicles remain unknown, but it is expected that changes will effectively reinforce its air quality strategy and its mission to convert fleets - and consumers - to take to the roads in plug-in and ultra-low emission cars.
Clear Air Zones are expected to be introduced by local authorities that have breached air quality standards and they are the central focus of the government’s long-awaited plans to reduce nitrogen dioxide (NO2) levels nationally.
The Clean Air Zones - around 80 local authorities have been identified by the government as having roads with concentrations of NO2 forecasted at above legal levels - were the key plank in the Department for Environment, Food and Rural Affairs’ long-awaited and recently published Air Quality Plan. The recently-elected government is expected to publish the final Plan, following a consultation period, by 31st July.
The aim of the Plan is to reduce the impact of diesel vehicles, and accelerate the move to cleaner transport, notably plug-in vehicles. The government has signaled that it wants public sector fleets to move away from operating diesel vehicles and has called on businesses to follow that lead highlighting corporate social responsibilities.
Businesses, suggests the government, can play an important role in improving air quality through both how they operate vehicles and through influencing their employees’ behaviour, including the use of ‘grey fleet’ cars, which are owned by employees and driven on business journeys.
The government says: “Improving air quality should be considered an important part of corporate responsibility and sustainability. Businesses which make improvements should be supported and rewarded for their action creating a virtuous circle where the city becomes an attractive place for businesses and their customers.”
Furthermore, the government says it will consult separately on regulatory changes to support the uptake of alternatively fuelled (non-diesel) vans.
The government said: “Vans spend much of their time driving around our towns and cities and over 96% of them are diesel powered so there is a pressing need to support innovative new solutions.”
Five cities - Birmingham, Leeds, Nottingham, Derby and Southampton - are already required to introduce Clean Air Zones under the government’s 2015 UK Air Quality Plan. Additionally local authorities in Greater Manchester and in Bristol and South Gloucestershire have secured Air Quality Grant funding to develop Clean Air Zone proposals.
The government says it will work closely with local authorities with a view to them finalising detailed proposals covering entry and charging criteria to the Clean Air Zones within 18 months for introduction in 2020 or sooner if possible.
The government is recommending that the minimum emission standards for Clean Air Zones are: Cars and vans, Euro6 diesel or Euro4 petrol; HGVs, buses and coaches, Euro V1; and motorcycles/mopeds, Euro3. Vehicles that do not meet those standards could be charged to enter a Clean Air Zone. The suggested entry criterion mirrors that for London’s Ultra-Low Emission Zone.
Implementation of each Clean Air Zone must be approved by the government before it can go ahead. However, the government argues that charging for Zone entry should be treated by local authorities as a last resort, pointing out it should only be used where local authorities fail to identify equally effective alternatives. However, there is concern as to how effective non-charging Clean Air Zones would be in persuading drivers to stay out of those areas.
If local authorities conclude that charging was the only way to achieve compliance in the shortest possible time, they will be required to set out the detail of: the roads and classes of vehicles subject to a charge, what the charges will be, the manner in which charges would be made, collected, recorded and paid, the hours during which charges would apply, exemptions and reduced rates from charges and enforcement regimes and penalties for non-payment of charges. Automatic number plate recognition (ANPR) would be used for the operation of charging Clean Air Zones.
The government says that local authorities should set the level of charge for vehicles entering a zone appropriate to their local circumstances. The level of charge would be within upper and lower bands, which the government says it will publish at a later date.
Meanwhile, London’s Ultra-Low Emission Zone will cover the same area as the capital’s existing congestion charging zone. Petrol vehicles that don’t meet Euro4 emission standards and diesel vehicles that do not meet Euro6 emission standards will have to pay a daily fee (£12.50 for cars, vans and motorbikes; £100 for buses, coaches and HGVs) to drive in the zone, 24 hours a day, 365 days a year.
It means petrol cars more than 13 years old in 2019, and diesel cars more than four years old in 2019, are unlikely to meet the new standards. The total cost, with the congestion charge added (during the times of day it is applicable), for drivers with non-compliant cars to drive in central London will be £24 a day (£23 for congestion charge fleet auto pay customers).
As a result, fleet operators should check the emission standards of their current vehicles - particularly ensuring that replacement programmes mean Euro6 diesel emission standards will be met by the time the Ultra-Low Emission Zone and Clean Air Zones are introduced - or they will pay the price for entry. Typically petrol-engined cars operated by fleets will be of an age that they meet entry eligibility.
Furthermore, London Mayor Sadiq Khan is proposing to extend the Ultra-Low Emission Zone across Greater London for heavy diesel vehicles, including buses, coaches and lorries in 2020, and up to the North and South Circular roads for cars, vans, minibuses and motorcycles in 2021.
If a vehicle does not meet Ultra-Low Emission Zone standards and the daily charge is not paid, a Penalty Charge Notice (PCN) will be issued payable by the registered owner or operator. The penalty would be in addition to any congestion charge or Low Emission Zone penalties received. For motorcycles, cars, vans and minibuses the penalty is £130 (reduced to £65 if paid within 14 days) and for HGVs, coaches and buses it will be £1,000 (reduced to £500 if paid within 14 days).
A further complexity sees a so-called T-Charge (Toxicity Charge) being introduced in London on 23rd October. It applies to vehicles, including cars, vans, minibuses, buses, coaches and HGVs, that do not meet Euro4 standards, typically those diesel and petrol vehicles registered before 2006. It will operate on top of, and during the same operating times, as the congestion charge (Monday to Friday 7am-6pm). The T-Charge will be axed when the Ultra-Low Emission Zone is introduced.
All those developments have led the consulting arm of motor industry date suppliers and forecasters CAP HPI to conclude in its recently published ‘Petrol versus Diesel’ report: “It is clear that the fleet market is concerned enough about future diesel [residual] values to reduce their exposure to them.”
With some fleets opening up their ranges to petrol, the report continues: “Fleets are moving to balance their portfolios to reduce their exposure to falling diesel residuals. Similarly, there is an increased demand for low and zero-emission vehicles from businesses wanting to show themselves as environmentally aware.
“At the same time, end-users are also looking to shift away from diesel. With benefit-in-kind taxation on company cars planned to increase over the remainder of the decade, more and more company car user-choosers are looking at low and zero-emission alternatives, some of which offer a better deal for company car drivers.”
However, BVRLA chief executive Gerry Keaney said: “Diesel vehicles remain a vital part of the fleet mix though, as diesel engines are the most energy-efficient internal combustion engines. It is often the most appropriate powertrain for long distance journeys and non-urban freight transportation, and the latest Euro6 diesel engines have made some major gains in reducing harmful NOx (nitrogen oxide) emissions.”
SMMT chief executive Mike Hawes said: “Euro6 diesel cars on sale today are the cleanest in history. Not only have they drastically reduced or banished particulates, sulphur and carbon monoxide but they also emit vastly lower NOx than their older counterparts - a fact recognised by London in their exemption from the Ultra-Low Emission Zone that will come into force in 2019.”
Criticising some media reports citing the “death of diesel”, Mr Hawes said: “Some recent reports have failed to differentiate between these much cleaner cars and vehicles of the past. This is unfair and dismissive of progress made.”