There are some who feel that the government’s shifting the target is simply virtue-signalling: on its own this is not powerful enough a mechanism to deliver the required up-take in demand for electric vehicles that would help contribute to the UK’s goal to be carbon neutral by 2050.
The reality is that significant logistical and demand-side barriers still stand in the way of such growth. Despite technical innovations increasing EV driving range and lowering costs, the government and industry leaders must tackle the lack of charging infrastructure to give consumers confidence that they won’t be left high and dry when they need to re-charge. Emotive consumer barriers that relate to the familiarity and attachment to the driving experience of petrol vehicles need to be addressed as well.
It’s worth noting auto manufacturers have also cried foul claiming the government has “moved the goalposts” and have accused the PM of setting a “date without a plan” but we’ll save their particular objections for another time.
The paradox is that this transition should be win-win for all. The Committee on Climate Change published a remarkable chart in their recent Net Zero report, which shows huge net benefits are quickly realised from making this switch to EVs.
Progress to realising these benefits is currently too slow. Targets are often derided but can also have the effect of focusing the mind. It remains to be seen whether this will drive the more concerted and integrated action is required from industry and government to develop the charging infrastructure and better understand public acceptability barriers for a ban on the sales of petrol, diesel and hybrid cars to be workable by 2035.
The Road to Zero Strategy was launched by the UK government in July 2018. This outlines how the government plans to achieve its ambitious goal – by 2040, all newly registered cars will be ultra-low emission (hybrid and battery electric vehicles). Between January 2018 and January 2019 we have seen an impressive 110% increase in electric vehicle (EV) registrations. Despite this, EVs only make up 0.7% of newly registered cars. The question therefore remains – is consumer demand for EVs and ultra-low emission cars rising fast enough to meet the government target?
To understand the trend in rising demand for EVs, firstly, one has to look at the increased public and private efforts to make EV charging part of consumers’ everyday lives. As we discussed in a previous blog, the availability of charging opportunities or ‘range anxiety’ is a key concern for consumers. Two recent developments in England address this fear:
1. Improvements in charging infrastructure:
Funding to improve coverage: In London multiple funding opportunities are available to boroughs to increase their local charging network, and a number of boroughs have ambitious goals. Westminster aims to increase its network by 25% and Wandsworth wants to build 400 charging plugs in summer 2019.
Faster charging:Pivot Power works together with National Grid to extend the existing charging network across the UK by developing 45 fast charging sites close to towns and major roads.
Cheaper and easier access: The scheme Plugged-In Midlands was developed to enable members to have mostly free access to charging stations across the Midlands with one card. The geographic reach has now been extended, giving members access to charging at over 5,000 locations across the UK.
2. Integrating EVs into everyday lives:
Charging when going shopping:Volkswagen, Tesco and Pod Point announced that they will be developing the UK’s largest retail electric vehicle charging network, including 2,400 electric vehicle charging bays spread across 600 Tesco stores. This initiative allows individuals to charge their EVs whilst going out shopping, one step towards producing a ‘hassle free’ experience in owning an EV vs. a traditional petrol / diesel car
Charging at work: IKEA went further and not only provide charging points for their customers, but also their employees. This predominantly free service was introduced together with Ecotricity.
Infrastructure around charging hubs: More recently, the power infrastructure company Gridserve has released their plans to develop more than 100 ‘electric forecourts’. Developing infrastructures with cafes, supermarkets and airport-style lounges around charging points, which will make the experience of charging more accessible and pleasant.
Making charging more accessible through combined public and private sector efforts may help explain the current trends of increasing EV registrations – but is this enough to reach the government’s target? Looking at current data to predict future EV registration numbers, we have calculated four different potential growth models, illustrated below. Current growth trends in the UK are following a simple linear growth of 0.5% increase in registration numbers. If this trend continues, it will be unlikely that we meet the UK target. Instead, accelerated growth rates are needed. Based on historical development of other technologies it is unlikely that registration numbers will result in exponential growth. Therefore, it is more likely that EV registration numbers will rise in form of an S curve. For this to happen, however, growth rates have to accelerate soon.
Overall, we observe that more people are purchasing EVs, but the share of EVs on the road remains very small. While improving the scale, performance and integration of charging infrastructure into everyday life is a move in the right direction, it is only a small step towards the government’s 2040 goal. To stimulate the market at a more accelerated rate, more infrastructure investment, political incentives and supply-side actions are needed.
The mood in advance of this year’s Budget has been one of contradictions. On the one hand, it was widely expected to be a low-key affair, both fiscally and politically. Finalising and getting the Brexit deal through Parliament remains the priority; that coupled with the Conservatives’ lack of a parliamentary majority, means this was unlikely to be a budget of sweeping reforms. Certainly not with ‘Spreadsheet Phil’ at the helm.
But Theresa May gave the Chancellor some hospital passes with her pledges for £20 billion more for the NHS, to maintain the freeze on fuel duty and, most challenging of all, to put an ‘end to austerity’.
So how did the Chancellor manage to meet the spending commitments while also keeping Britain’s public finances on the straight and narrow?
With a classic May Government move: a fudge.
The Chancellor indeed declared that “the era of austerity is finally coming to an end.”
But the policies which backed this were limited: plans to raise the income tax thresholds were brought forward to April 2019 (enabling the Tories to tick off the ‘tax-cut’ box), business rates were cut for smaller businesses, and additional spending for the MoD and NHS was delivered.
The controversial Universal Credit, a pre-Budget crisis area for the Tories, was granted an additional £1 billion, and the work allowance under the scheme was increased – a policy which makes a big difference to those on Universal Credit at modest cost to the Treasury.
While the net spending commitments in the Budget were higher than for any Budget since 2010, it didn’t have the feel of a ‘giveaway’ Budget.
The end of austerity was actually achieved by unofficially abandoning the objective to eliminate the deficit; Hammond announcing that borrowing will be around £20 billion a year in 2023/24, beyond which date no figures are offered. This left the manifesto promise of a budget surplus well beyond the horizon. Perhaps the Conservatives could be accused of finding their own ‘magic money tree’.
Yes, the public mood has turned against the concept of austerity. Abandoning the Conservatives’ fiscal policy rhetoric of the past decade, without having achieved the actual end goal, leaves the party in a tricky spot. Trying to deliver the public’s raised expectations for investment in public services while having not actually built the strong fiscal position needed to do so will prove a challenge. If the economy deteriorates, the Government will be hostages to fortune and some will claim all the hardship experienced under austerity was for naught.
True to form for the May Premiership, there was no grand plan. Hammond positioned the Conservatives as a bit like Labour, but more responsible: blue, but with hues of red. As Hammond ended the Conservatives decade old fiscal policy, he didn’t have anything to plug the gap, bar a few stolen Labour policies – the ending of PFI contracts, for instance.
This is surely the central challenge for the Conservatives. Will people vote for “Labour light” when the full fat version is available? Hammond and May have blurred the dividing lines on fiscal policy – will they come to regret it?
Delivering the UK Government’s targets for emission reduction and electric vehicle (EV) uptake depends on addressing three key challenges, according to a panel of EV experts convened by Madano.
Huge steps have been taken in the decarbonisation and electrification of the UK fleet, but there is much more to be done to (1) stimulate the demand side, (2) secure clearer and longer-term policy from Government and (3) increase automotive and energy cross-sector alignment to deliver the grid flexibility, capacity and reliability to enable large-scale EV adoption.
The Prime Minister’s announcement this week of new funds will help in some part with the first barrier and go some way to putting the cheque book behind the Road to Zero strategy. But encouragement is also needed for the industry to work together and provide consistency and certainty for consumers. Here we look at this final challenge and then the question of whether the Government targets are achievable.
Connecting up: automotive and energy working together
Improving consumer confidence needs action at interface between the automotive and the energy sectors. Primarily, this is about demonstrating consumer value, creating demand for domestic and public recharging as well as providing reassurance over future energy pricing.
Providing reassurance on long term electricity supply is required to address concerns that the grid will not be able to cope. While the National Grid Energy Scenarios have shone some light on the potential solution, there isn’t a consensus view on where reliable and affordable supply will come from and how peaks and troughs will be balanced if there is widespread EV uptake.
Provision of off-peak charging, linked through smart meters to reliable off-peak tariffs, is required to develop confidence in the practicality and affordability of home charging. This adds to the case the EVs add value for consumer and don’t just reduce emissions.
Consistent communication from the automotive and energy sectors on charge-point accessibility and interchangeability, energy supply and electricity pricing is required to build confidence in the private and public recharging networks.
The challenges of aligning the automotive and energy sectors, together with stimulating the demand side and clarifying Government policy, begs the question: are the UK Government’s 2040 and 2050 targets achievable?
Madano’s panel was inclined (with one exception) to say yes, but there are three stages (as illustrated in Madano’s technology adoption S-curve) which each present their own complex challenges:
In the early phase, the groundwork has to be prepared, in terms of reliable long-term policy, consistent messaging, and reliable accessible infrastructure, to build confidence in and beyond early adoption.
In the middle phase of rapid growth, both demand-side stimulus and vehicle and infrastructure supply will also need acceleration. Almost certainly, in the panel’s view, it will be necessary to have a transition period between petrol/diesel and EVs. There will remain a long-term role for clean diesels, for both practical engineering reasons as well as to help transition tax revenue streams.
In the final stage, the drive towards 100% uptake will require an exhaustive push into the further reaches of UK geography and behaviour. The final 5% of this 100% may be unobtainable and the Government may have to decide 95% is close enough.
Madano set out with this series of articles and panel discussion to explore the barriers to EV uptake and the role of communication. The discussion has highlighted a number of key barriers, ranging public policy through engineering practicality to consumer perception. While the Prime Minister’s announcement of new funding is welcome, in overcoming each challenge sophisticated communication is key. Electric mobility requires whole system change, and this requires much more significant investment but most importantly joined up thinking and consistent messaging.
For those working in the energy industry, it feels like hydrogen has been around for a long time. Many remember the ambitious commitments of George W. Bush and the European Commission back in 2003. The UK’s Prime Minister at that time, Tony Blair, was similarly enthusiastic about hydrogen’s transformative low carbon potential. But even at the time it felt very much “top-down”.
Fast-forward 15 odd years – can we really say that the UK’s hydrogen economy has fully delivered on its vast potential?
There are notable successes including a number of hydrogen-powered buses around the capital and a few other major UK cities. Fuel cell developers in the UK have made good ground internationally too.
As a communicator in the energy space, I still cannot escape the feeling that the hydrogen economy has been talked of for quite some time without ever delivering the vision and objectives of Government or the industry itself.
The general public, meanwhile, has had few direct touchpoints with hydrogen that showcase the fuel’s enormous benefits and potential for their lives. Surely a more relevant question is, has the hydrogen industry been telling the right story to the right people?
In transport, the news for hydrogen is similarly mixed. According to a recent study from EV Volumes, just 87 fuel-cell vehicles were sold during the first six months of 2018, compared to 66 in the first half of 2017. According to the same research, sales of battery electric and plug-in hybrid cars were up 42% in the first six months of 2018 compared to the first six months of 2017 meaning that there are now over 1 million EVs in Europe.
This conclusion might not surprise many but it is instructive. If the UK’s hydrogen players want to accelerate hydrogen in transport, in heating and in commercial applications, it seems self-evident that it must refocus its sights on communicating to the general public and generating excitement in the technology. It is similarly clear that Government has to make choices – consumer consent is a key factor in helping to persuade Government to back a technology.
Public acceptance is crucial. People can’t get excited about hydrogen if the industry looks inwardly, talks to the same audiences and relies on central Government to tell their story – anyone following the smart meter rollout can point out the pitfalls in this strategy.
Creating “demand pull”
The public’s rapidly growing interest in EVs serves as the most cogent template for hydrogen. By creating “demand pull” among the public over the past few years, car manufacturers have become more confident in investing in EV technology. As the technology has improved and costs gone down, more people are interested in investing in an EV as their next vehicle.
Consequently, car manufacturers are now spending significant amounts of cash on ads featuring EVs rather than their existing conventional combustion-engine ranges. Indeed, just this past week, Mercedes launched its EV SUV range to global fanfare.
Is hydrogen a special case?
One could easily argue that hydrogen is a special and complex case given its range of applications beyond transport. It might be more relevant to talk of hydrogen economies. It is a considerable leap of faith for many to envisage a zero emission hydrogen boiler replacing natural gas in homes, particularly the general public.
Yet, by taking baby steps first and focusing on hydrogen’s potentially positive impact on people’s lives starting in transport and the home, the industry can deliver a strong narrative that hydrogen is clean, safe and affordable because the tangible benefits can be seen and grasped by everyone.
Where next for the UK’s hydrogen economy?
With EVs wowing increasing numbers of people and with the Government firmly committed to the low carbon economy through its Clean Growth Strategy, there is clear impetus for the UK’s hydrogen players to move beyond a focus on policy to speak directly to those who will ultimately decide whether the UK’s hydrogen economy will be successful or not – the British public.
As the Committee on Climate Change’s upcoming report reveals, the general public are more likely to accept the role of hydrogen in the home if it can be shown to provide additional utility and once both short- and long-term considerations about the technology’s safety and convenience have been answered.
This week Madano is bringing together leading figures from the UK’s hydrogen industry from vehicle manufacturers to energy companies to those that advise them directly to look at how the hydrogen story can be told in new and interesting ways to gain the public’s acceptability.
Written by Darran Messem, Head of Transport and Sustainable Development
Delivering the UK Government’s targets for emission reduction and electric vehicle (EV) uptake depends on addressing three key challenges, according to a panel of EV experts convened by Madano.
Huge steps have been taken in the decarbonisation and electrification of the UK fleet, but there is much more to be done to (1) stimulate the demand side, (2) secure clearer and longer-term policy from Government and (3) increase automotive and energy cross-sector alignment to deliver the increased electricity grid flexibility, capacity and reliability to enable large-scale EV adoption.
Here we look at the second of these three challenges: securing clearer and longer-term policy.
When discussing demand-side challenges (see previous article in this series)the expert panel kept returning to the impact of confused policy signals on diesel together with the short-term nature of many policy instruments. Arguably the hardest work has to be done now to create the platform for increased demand over the next 20 years. It will be necessary to create more certainty in the market to change both buyer and user behaviour. This will require strong and consistent policy signals upon which informed choices can be made. Key among these signals are the financial signals sent by fiscal and taxation policy.
As the sudden and dramatic increase and then decrease in diesel vehicles shows, Government messaging and fiscal policy have a profound effect in shaping the vehicle market. Already there are clear messages and financial incentives, such as the plug-in car grant, to support EV uptake, but the expert panel’s view was that these signals are insufficient and inconsistent. Here there are three key concerns:
Incentives should be proportionate to emission impact to encourage the better choices. Currently the plug-in car grant applies to plug-in hybrid vehicles even though these may spend the majority of their working lives in combustion-engine operation, although it is recognised plug-in hybrids provide a positive interim technology that helps demonstrate and build confidence. The grant does not adequately reflect the whole-life electric operation of a pure EV. Further, the harmonisation of vehicle excise duty (VED) has not provided a clear market signal, and even greater differentiation in VED bands than existed in the past will be needed to drive clear and sustained patterns of demand. It was noted that VED costs are a key driver in the second-hand market.
Policy needs to be longer term to build confidence in the desired trajectory. There will be a change to EV tax for company cars in 2020. This is creating hesitance in the market today. Positive incentives could be brought forward. Norway is often cited as an example of a successful EV market, and the expert panel noted the consistency and strength of policy signals in Norway. Clear policy signals that extend beyond the short life of one Parliament are needed, which probably requires an Act of Parliament that binds future Governments, as is the case with the Climate Change Act of 2008.
Policy signals need to be consistent across the automotive and energy sectors to provide the necessary information and support. The desire to shift to electric mobility needs to be signalled through domestic charging infrastructure and tariffs, as well as through vehicle incentives and pricing. The expert panel was concerned that the financial structure on electricity pricing for domestic recharging is anything but clear with a potential £28bn hole in H.M. Treasury’s income resulting from petrol and diesel duty reductions, and the threat of this being recouped through domestic tariffs on recharging is acting as a brake on the market. Too few electricity suppliers are offering EV recharging tariffs. Smart meters are not addressing the requirement for optimising recharge time for off-peak supply. Swapping energy supplier remains insufficiently simple to create the market for easier tariffs and supply.
A concluding remark from Madano, who convened the panel and the background research. We set out with this series of articles and panel discussion to explore the barriers to EV uptake and the role of communication. The discussion has highlighted a number of key barriers, ranging public policy through engineering practicality to consumer perception, and we observe that in all cases communication is key, because electric mobility requires whole system change, and this requires joined up thinking. Insight – communication – impact.
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