6 Centre for Economics and Business Research 2. Introduction This report examines the costs and benefits associated with the forthcoming bans on internal combustion engine vehicles. This decision represents a major regulatory change as well as implicitly dedicating the government to undertaking high levels of investment to facilitate those changes. One of the main ways the government hopes to achieve Net Zero by 2050 is to decarbonise the transport sector. Transport is now the highest emitting sector of the UK economy, accounting for 22% of total greenhouse gas (GHG) emissions, 113 MtCO2e in 2019. This compares to 21% coming from energy supply, 18% from business, 16% from the residential sector and 11% from agriculture. 1 In particular, cars comprise 13% of UK GHG emissions (and approximately 0.2% of global emissions), vans 4% and HGVs 4%. The level of GHG emissions deriving from the transport sector has remained fairly consistent over time, with improvements in fuel efficiency offset by increased travel. Meanwhile, other major emitters like energy production have decarbonised significantly. A central part of the government’s plans to decarbonise transport involves ending the sale of new: • Petrol and diesel Internal Combustion Engine (ICE) cars, motorbikes, and vans from 2030; • Hybrid Electric Vehicle (HEV) and Plug-in Hybrid Electric Vehicle (PHEV) cars motorbikes, and vans from 2035; • And, subject to consultation, ICE, HEV, and PHEV heavy goods vehicles (HGVs) over 26 tonnes from 2040. As a result, it is expected that the number of EVs, and especially pure EVs (or Battery Electric Vehicles, BEVs) – powered wholly by a battery which is charged from electricity – will in response rise substantially. For instance, the Climate Change Committee’s (CCC)2 Sixth Carbon Budget Balanced Pathway projects that the number of pure EVs on the road could grow to 14 – 18m by 2030 from only half a million in 2021. Furthermore, the CCC envisions a rapid uptake of EVs to 23.2 million by 2032 (55% of all vehicles). FairFuel UK, the Alliance of British Drivers, and the Motorcycle Action Group would like to understand the economic impacts of the Government’s plans. In particular, they would like to ascertain the costs to the economy. The bans on ICE vehicles will affect the UK’s 37m drivers. Whilst using the conventional valuations it is believed there will be benefits in the form of reduced GHG emissions and cleaner air, there will also be negative impacts. This report considers both by means of costbenefit analysis. 1 BEIS - Link 2 Climate Change Committee (CCC) – Link
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