Cebr Analysis of 2030 Ban

4  Centre for Economics and Business Research 1. Key Points • This is a study that uses official government methodology to compare the projected environmental benefits from the proposed bans on the sale of fossil fuel powered vehicles with the likely costs. • The study shows that the environmental benefits from the proposed bans are dwarfed by the additional costs. • The study assesses economic impacts over the period 2022 until 2050. 2022 prices are used as a common baseline and all costs and benefits are discounted to a 2022 base year (with selected values also presented on an annual/undiscounted basis). • Using the government’s values for reduced carbon emissions, the value of the environmental benefits add-up to £76 billion. In contrast, the assessed costs add up to £400 billion. These costs are FIVE times the benefits; even when using the government’s own valuations of the environmental benefits. • The study shows that the major costs from the proposed ban are likely to be additional costs of: I. New vehicle purchases of £188 billion (in extra costs). II. Increased time lost due to waiting whilst recharging EVs, valued at £47 billion. III. Infrastructure for electricity generation and additional charging points of £99 billion. Even the overall environmental benefits are rather lower than might be assumed since approximately 50% of any reductions in emissions from usage are likely to be offset by increased emissions in vehicle production. Furthermore, this analysis does not take account of the likely increased emissions and other social costs from the massive increase in mining likely to be required by EVs. These extra emissions will be transnational in nature, relating to the processing of raw materials and associated shipments across the globe. Finally, there is likely to be a loss of tax revenue of £5.8 billion per annum (£2.7 billion when discounted to 2022 base year terms), on average, in the scenario of a ban in comparison to a no-ban scenario, as fuel duty and VAT dwindle away. The annual revenue loss is £198 million in 2030 (£150 million when discounted to 2022 base year terms), rising to about £16 billion in 2050 (£6 billion when discounted). We assess that replacing this revenue, for example, would require increasing the rate of VAT or the basic income by an increasing amount throughout the period of analysis, peaking at an increase of 0.8% for VAT or 1.1% for the basic rate of income tax in 2050. From the perspective of the average household, these additional costs over the period 2022 to 2050 amount to a total of £14,700 per household in 2022 terms. Using undiscounted values, this is an impact of £27,400 per household, or just under £1,000 per household per year from 2022 until 2050. The study also looks at how sensitive the results are to a range of different assumptions. For instance: