The great debate on diesel vehicles

These days, it seems not a week goes by without a new policy proposal aimed at diesel vehicles. March's Budget revealed that the Chancellor is considering tax rises for diesel motorists. The Mayor of London has announced that some of them will have to pay a new ‘T-Charge’ from October. Rumours of a ‘toxin tax’ and diesel scrappage scheme circulated before the election.

And the biggest story came at the end of July, with the publication of the Government's new Air Quality Plan. We detailed the contents of that Plan, but it’s also worth taking stock and asking how we got here – to help prepare for what’s to come.

Combating air pollution

It’s all about air pollution. Concerns about the levels of nitrogen dioxide (NO2) and other particulates in the air have grown over recent years – partly due to high-profile court cases, and the Volkswagen emissions scandal of 2015.

In 2010, the Government introduced Air Quality Standards Regulations that wrote into British law the emission standards set across the European Union, and which require ministers to draw up Air Quality Plans wherever those standards are breached. The UK has exceeded the limits for NO2 ever since they came into force on 1 January 2010.

To tackle this problem, policymakers have largely focused on reducing the number of older diesels in towns and cities, as they generally emit more NO2 than petrol vehicles.

NO2 versus CO2

Of course, it’s not quite as simple as that. There’s also the need to reduce the carbon dioxide (CO2) emissions from transport that contribute to climate change. On this front, diesel vehicles are generally better than petrol ones, albeit not by as much as they used to be.

Back in 2007, the average new diesel car emitted 164.3g CO2/km – 15% less than the average new petrol car. That gap has closed dramatically since. Diesels registered in 2016 emitted an average of 120.1g CO2/km – just 3% lower than the 123.7g CO2/km for petrol.

But diesels have also improved when it comes to other emissions. New diesel cars face stricter limits on emissions of nitrogen oxides (NOx) than they used to. All those registered since 1 September 2015 have been subject to Euro 6 emission standards, which limit NOx emissions to 80mg/km. That’s 55% lower than the Euro 5 limit of 180mg/km. However, real-world testing has revealed that Euro 6 diesels actually emit around 500mg NOx/km on average.

Of course, there are alternatives that are much better than either petrol or diesel when it comes to both climate change and air pollution. Hybrids emit much less CO2 and NO2 than traditional cars, while pure electric cars emit none at all. Emissions are produced when the electricity is generated, but for CO2 these are much lower than those produced by internal combustion engines, while the NO2 is generally emitted far from the urban areas where pollution is such a problem. And both types of emission will be reduced as more electricity comes from renewables.

The Air Quality Plan

A number of policies have already been implemented to disincentivise motorists from using diesel. In the case of company cars, for example, the Government added a 3-percentage point ‘diesel supplement’ to Benefit-in-Kind rates back in 2000. Since 2008, most of Greater London has been covered by a ‘Low Emission Zone’, within which the oldest and most polluting diesel vans, buses and lorries must pay a daily charge of £100 or £200.

However, in April 2015 the Supreme Court ruled that the Government’s existing plans would not reduce COemissions quickly enough, and ordered Ministers to draw up new ones. The Government published a new Air Quality Plan in December 2015, but even that was deemed insufficient by the High Court in a November 2016 judgment. The Government was instructed to try again, and given until 24 April 2017 to publish an improved draft of its Air Quality Plan.

In the run-up to that deadline, speculation mounted as to what measures the Plan would contain. In particular, newspapers predicted a ‘toxin tax’ – a charge that would apply to diesel vehicles driven within city centres, similar to the one faced by some diesels in London’s Low Emission Zone. This provoked an outcry from the tabloids, the FairFuelUK campaign group, and even some Conservative MPs. The Prime Minister herself weighed in. ‘I’m very conscious of the fact that past governments have encouraged people to buy diesel cars,’ she said, ‘and we need to take that into account when we look at what we do in the future.’

But, come the 24 April deadline, there was still no new Air Quality Plan from the Government. Andrea Leadsom, the Secretary of State responsible, announced that it would be postponed until after the General Election. The High Court refused her application for an extension, however, and ordered the Government to release the draft Plan by 9 May, which it duly did. The final version followed on 26 July.

As we reported at the time of the Plan’s publication, the main way the Government hopes to curb NOx emissions is through the introduction of Clean Air Zones in the towns and cities with the worst air pollution problems. 29 local authorities have been given until March 2018 to draw up their own draft policies, and until the end of 2018 to finalise them.

Councils will be allowed to impose charges on the dirtiest vehicles entering Clean Air Zones, but the Air Quality Plan essentially says that introducing such ‘toxin taxes’ should be a last resort. We’ll have to wait until next year to find out if any local authorities will actually do so. We do know that diesels meeting the Euro 6 emission standards will be exempt from any charges, though.

Of course, there’s also the Air Quality Plan’s ban on the sale of all new diesel and petrol vehicles by 2040. Although, with both manufacturers and consumers increasingly turning towards alternatively-fuelled vehicles anyway, it remains to be seen how much difference the ban will really make.

Other diesel policies

But there are also many other ways policymakers are seeking to turn motorists away from diesel.

Mayor of London Sadiq Khan is introducing a ‘T-charge’ for the most polluting vehicles in the centre of the capital from 23 October 2017. Diesels made before 2006 will have to pay £10 a day on top of the existing Congestion Charge. And Khan recently announced that Central London will become an ‘Ultra Low Emission Zone’ in April 2019, when the T-charge will rise to £12.50-a-day.

The Chancellor, Philip Hammond, also hinted at tax rises for diesel motorists in his Spring Budget. The Red Book declared that ‘the government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017.’ Hammond is yet to reveal any specific proposals on this front, though they might include higher Vehicle Excise Duty rates for diesel cars.

While action to improve air quality is both necessary and welcome, politicians should be careful not to unfairly penalise diesel motorists. That’s why there have been widespread calls for a scrappage scheme, which would give drivers money towards buying cleaner cars when they trade in their old diesels. Khan is advocating such a scheme, and Transport Secretary Chris Grayling reportedly backs it too. Indeed, it might have been included in the Spring Budget had the Chancellor not decided that it would cost too much.

With Theresa May having promised help for diesel drivers, Hammond may be forced to think again. The Financial Times reported in April that the Prime Minister had ordered officials to draw up plans for a diesel scrappage scheme. The Air Quality Plan didn’t include such a scheme, and warned of poor value for money and the risk of fraud. Nevertheless, a consultation in the autumn will invite views on a targeted version of the proposal. It may yet find its way into a future Budget.

Despite the publication of the Air Quality Plan, much around diesel’s future remains uncertain. But one thing is for sure: it will continue to occupy a prominent position in the nation’s political debate for some time to come. We’ll be watching closely.