Business Irish

Wednesday 21 August 2019

Green revolution set to drive older cars off roads

The Climate Action Plan will have a huge impact on the car industry with a petrol and diesel car ban and a switch to electric vehicles, writes Dan White

High prices and a short range, a quarter of that of a diesel-engined car, as well as difficulties in preparing the charging infrastructure could hamper proposals to scrap older cars. Photo: Tom Wang
High prices and a short range, a quarter of that of a diesel-engined car, as well as difficulties in preparing the charging infrastructure could hamper proposals to scrap older cars. Photo: Tom Wang

Dan White

The Government's recently-published Climate Action Plan, which proposes banning the sale of fossil fuel-powered cars by 2030, has thrown the motor trade into turmoil.

The plan, which the Cabinet approved on June 17, contains a shopping list of 180 measures designed to tackle the threat of climate change. Of most interest were the transport measures, which if implemented, will utterly change how we move people and goods.

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The main highlight was the proposal to ban the sale of petrol and diesel-engined cars from 2030, a decade earlier than in the UK, and to stop issuing NCT certificates to these vehicles, effectively putting them off the road, from 2045.

If all goes according to plan fossil fuel-powered cars will be replaced by electric vehicles (EVs). The Climate Action Plan projects that there will be 75,000 EVs on our roads by 2022, 175,000 by 2025 and 800,000 to 950,000 by 2030 (documentation released along with the Plan contains a number of different figures for 2030).

Compare this with what has been happening up to now. In the 12 years to the end of 2018 a total of just under 4,400 EVs were registered for the first time. Admittedly EV registrations have been rising, from just 273 in 2014 to 1,922 in 2018. However, that still represented just 0.87pc of the more than 220,000 cars (new and second-hand) registered for the first time last year.

A total of 1,222 new and 700 second-hand EVs were registered for the first time last year. EVs accounted for 1pc of new car registrations and 0.7pc of second-hand registrations in 2018.

EV registrations have continued to grow strongly this year with the number of new EVs being registered for the first time almost quadrupling to 1,867 in the first five months of 2019. The number of second-hand EVs registered declined from 280 to 214 over the same period.

However, even after allowing for the recent increase in registrations, there are still fewer than 7,000 EVs on our roads. That's the equivalent of just a third of one per cent of the 2.1 million cars on our roads. It is against this background that the Government's promise to have between 800,000 and 950,000 EVs on the roads by 2030 must be judged.

Even these recent increases have only been made possible by extremely generous grants and subsidies. Anyone buying a new EV qualifies for a VRT refund of up to €5,000 and a grant of up to €5,000 from the Sustainable Energy Authority of Ireland.

Even with this assistance the basic model of the best-selling EV, the Nissan Leaf, is still €28,650. Without the VRT refund (assuming it would otherwise have been liable at the lowest 14pc VRT rate) and the grant the basic Nissan Leaf would have a showroom price of almost €40,000.

Price isn't the only obstacle. Range and charging are also major issues. According to Nissan, the Leaf has a range of just 270km, barely enough to drive from Cork to Dublin and not much more than a quarter of the range of a comparable diesel-engined car.

EVs' relatively short range might not be such a problem if it didn't take so long to charge their batteries. Nissan says that fully charging the Leaf takes eight hours. This means that any significant expansion of EV numbers will have to be accompanied by a huge increase in the number of charging posts.

While the Climate Action Plan promises a charging infrastructure capable supporting up to 175,000 electric vehicles by 2025, the specific measures, introducing a capital support for local authorities to install up to 200 on-street chargers a year, are considerably less impressive. Even if the full number of on-street chargers was installed, about 1,400 by 2025, that still works out at just one charger for every 125 projected EVs.

Will 'charging congestion' become the new bugbear of Irish motorists?

Faced with these hurdles, it is clear that the Government will have to both dangle carrots and threaten the stick if it is to even come close to its target of having 800,000 EVs on the roads by 2030.

The uncertainty generated by the future of fossil fuels, particularly diesel, and now the Climate Action Plan has already hit new car sales. These were down by 7pc to just under 74,000 in the first five months of 2019 with some motor industry figures warning that new car sales, on which the Exchequer is heavily reliant for revenue, could go as low as 55,000 next year.

A tried and tested method of boosting new car sales is a scrappage scheme to encourage motorists to trade in their bangers for newer models. Ruari Quinn introduced the first scrappage scheme in the mid-1990s while the late Brian Lenihan followed suit in 2010. Will Paschal Donohoe make it third time lucky in 2020?

He almost certainly will. The Climate Action Plan promises to "consider in 2020 a car-scrappage scheme to promote the purchase of electric vehicles". Stand by for an announcement in next October's budget.

The carrot of a scrappage scheme will be accompanied by the stick of higher taxes for new and existing fossil fuel-powered cars. The Climate Action Plans speaks of a "recalibration" of VRT and motor tax rates to "further incentivise" us to trade in our petrol and diesels for electric vehicles.

While the plan doesn't specifically mention higher excise duties on fossil fuels it does promise to "develop a roadmap on the optimum mix of regulator, taxation and subsidy policies to drive significant ramp-up of passenger EVs and electric van sales from very early in the next decade", which probably amounts to the same thing.

The move to phase out fossil fuel-powered cars is based on the fact that transport is one of the major contributors to Irish greenhouse gas emissions. In 2017, the last year for which figures are available, transport was responsible for 12 million tonnes of emissions, 19.8pc of the total of 60.7 million tonnes.

However, although they have crept up slightly again in recent years, Irish greenhouse gas emissions, including those from transport, are still will below their mid-noughties peak. Total emissions are down almost 13pc since 2005 while emissions from transport have fallen by 17pc since 2007 - unlike overall emissions, transportation emissions are still falling with a further 2.5pc reduction being recorded in 2017.

However, this reduction will not be sufficient to meet the target of a 20pc reduction in emissions from the 2005 level by 2020 - and 30pc by 2030 - that Ireland has agreed with the EU.

Failure to meet these targets mean that we will have to pay several hundred million euro a year in fines. This is despite the fact that Ireland's energy intensity, the amount of energy consumed per unit of economic output, is the second-lowest in the EU.

The most recent figures from Eurostat, the EU's statistics agency, show that Ireland's energy intensity is just 54pc of the EU 28 average. Only tiny Malta on 53pc does better.

If the targets set out in the Climate Action Plan are achieved Ireland's greenhouse gas emissions will fall to zero by 2050. It is hitting zero emissions by mid-century rather than either the 2020 or 2030 reduction targets that makes getting rid of fossil-fuelled cars essential. While the 2030 ban on the sale of petrol and diesel-engined cars may yet prove to have been excessively optimistic, the direction of travel is clear.

This is certainly the view of the Society of the Irish Motor Industry (SIMI). Deputy chief executive Tom Cullen points out that as far back as 2005 the Government of the day promised to have 200,000 EVs on the road by 2020.

"When you cause confusion people sit on their hands. It is not a question of moving to EVs. The climate change argument is more about getting people out of older cars so that you have a blended fleet where people are driving what is suitable for them. We can get there."

The switch to EVs is coming at the same time as a number of other new automotive technologies including ride-sharing, operated by companies such as Uber, and self-drive vehicles are coming on stream.

Will this combination result in a different ownership model? Will we see the replacement of the traditional family car, many of which spend most of their lives parked on the driveway, with something that more closely resembles a taxi service, motoring co-op or car hire firm?

"Transport and agriculture are responsible for the largest share of emissions. Transport [emissions] has to be addressed. Electrification is part of the solution", says Professor Peter Thorne, director of the Irish Climate Analysis and Research Unit at NUI Maynooth.

"Electric vehicles don't just have a climate benefit. There is also the huge health impact from the improvement in air quality due to the removal of sulphites and particulates."

On the 2030 cut-off for fossil fuel-powered cars, Thorne believes that, while it is realistic if only Ireland opts for 2030, it might be more difficult if other countries choose to follow our example. "Can you push out the batteries and cars in that timeline if everyone is doing it [switching to electric vehicles]?"

However, he points to example of Norway to show what can be done. Over half of its car fleet has now been electrified. It has been able to do this by offering a series of incentives including zero vehicle tax (the tax on fossil fuel-powered cars is almost 200pc), no parking fees for EVs, discounted tolls, very low road tax and cheaper insurance.

He also feels that the current regime of grants and VRT refunds for EVs represents a subsidy for affluent motorists and that EVs still remain beyond the reach of the average person.

They should, he says, be replaced by a system of low-interest, long-term loans, that leave the motorist owning their car outright at the end of the loan term.

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