Vehicle Emissions Trading Schemes Order 2023

Baroness Young of Old Scone Excerpts

Monday 27th November 2023 Lords Chamber

[Baroness Young of Old Scone (Lab)]

My Lords, I declare an interest, as I sit on the Environment and Climate Change Select Committee, which is currently looking at electric vehicles. However, the views here are my own.

I am very pleased that the Government have brought forward a ZEV mandate, for all the reasons that the Minister has given. Quite a lot of us were fearful that it might not appear after the Government retreated into the herd when they slipped the phase-out target to 2035. The Government appeared to step back and let the manufacturers take the strain, which is a pity because Governments have a clear role in taking this issue forward.

The worry that I had was on the chilling effect of that change of date. There was a particularly poignant moment last week when the Select Committee was undertaking one of its outreach sessions with young people across the country in support of its electric vehicle enquiry. It was great to talk to these young folk. They are incredibly committed to the environment and absolutely get the net-zero thing. We were talking to them about the greater environmental awareness of young people, the pester power that they have with parents, and I asked them whether they were using their pester power to persuade their parents to adopt electric vehicles.

It was a bit shattering to hear them say, “There is no point in us trying to influence our parents on this because the Government have just said to them, by slipping the date, ‘Don’t worry, there is no rush. You don’t need to do it now—you can take all the time you like’”. I would like the Minister to understand just how chilling some of these changes of direction are. Even if they have internal logic of their own, the public see them as less commitment by the Government to these issues.

It would be great to see the Government active in some other measures to encourage uptake of electric vehicles, as well as introducing the mandate. I am a great believer that bans work—if you have an ultimate date for something not being permissible it concentrates the mind wonderfully—but it would great if the Government undertook a major campaign of reliable information to counteract the huge amount of misinformation about electric vehicles that is currently out there. The progress that has been made in both the technology and supporting technologies, such as charging, has been so great over the last few years. Any cries of doom and gloom about electric vehicles not being practicable at this stage are really misinformation. I hope the Minister could be persuaded to do more to have reliable information presented to the public, rather than just have it on the government website.

I note that the mandate is subject to review mid-term. I hope that, as well as the additional credit schemes for accessible vehicles and others that the Minister talked about, he might consider incentivising lighter vehicles, if that is not already being delivered by the scheme. Lighter vehicles create less pollution and road wear, and additional credits for manufacturers that create them would be a welcome step, if that is not already well advanced by the review period.

[Lord Lilley (Con)]

My Lords, like the noble Baroness, I too am a member of the Environment and Climate Change Committee doing a study of this. Unfortunately, I was unable to benefit from the huge wisdom of young people at the school she attended. Had I been there, I would have mentioned that, since we export over 80% of the cars produced in this country, the mandate for sales in this country and the phase-out date has very little effect on British manufacturers. They have to abide by the rules in their export markets. Meanwhile, 85% of the cars we consume are produced abroad.

I want to ask the Minister whether I understand properly how this system will work. Take a year when we are half way through, when the zero-emissions mandate requires any manufacturer’s sales to be at least 50% electric vehicles and no more than 50% combustion engines. Supposing that a manufacturer finds, in the course of a year, that his sales of electric vehicles fall short and the ratio turns out to be 40:60, am I correct that the manufacturer will have to pay a £15,000 fine on all 20 extra vehicles—the difference between 40 and 60—per 100 that are combustion engine? If so, my arithmetic shows that he will effectively have a penalty of £5,000 for every combustion-engine vehicle he has sold. That is a very serious penalty. I do not think people realise quite how serious it is. I am not sure whether the Government have thought through the reaction there would be from motorists if that turns out to be the case, especially as the people who tend to buy combustion-engine vehicles rather than electric vehicles are those who cannot afford expensive vehicles—because electric vehicles tend to be more expensive. They would find themselves paying that fine on usually cheaper, smaller vehicles—to the benefit of the richer purchasers of larger, more expensive, electric vehicles. Am I correct that this is how the system works?

The Minister may say that if manufacturers have excess sales of electric vehicles from previous years they can offset those, and can go out and buy permits from other manufacturers that are, perhaps, only selling electric vehicles. Who will be the manufacturers only selling electric vehicles? They will, by and large, be Chinese manufacturers exporting their vehicles to us. A manufacturer producing only electric vehicles and importing them into this country from China will be able to sell its permits on 50% of the vehicles it sells. It can get £15,000 for each of them and enjoy a subsidy equivalent to £7,500 for every vehicle it sells. Whizzo for the Chinese manufacturers—that far exceeds the effect of the 10% tariff they will have to pay on the vehicles. Am I correct too that we have invented a system that could really subsidise the import of Chinese electric vehicles?

Then I want to ask whether this will all be worth while. If it will reduce emissions, of which I am all in favour, then great. Questions have been raised about the inbuilt emissions of electric vehicles, which are heavier and more expensive than vehicles with internal combustion engines. I do not want to deal with that point. I want to deal with the fact that electric vehicles save emissions only if they use electricity produced from renewables or non-fossil fuel sources. More than 40% of the electricity we produced in this country last year came from fossil fuels. More importantly, 100% of the marginal electricity comes from fossil fuels. If we increase the demand for electricity by switching from fossil fuel powered cars to electric powered cars, the marginal electricity supplied to them will come entirely from fossil fuels, because you can increase the supply of electricity only from fossil fuels. You cannot summon the sun or hail up extra wind but you can increase the supply of electricity from gas-fuelled power plants. We probably will not actually reduce emissions until we have made all our electricity and have spare capacity from renewables or non-fossil fuel power sources. That is not planned to be achieved until 2035, which makes the phase-out date actually have some logic—at least it ties in with something else.

My noble friend the Minister read out a figure about the expected emissions savings. Does that assume that only 40% of the electricity will come from CO₂-producing fossil fuels or that 100% of it will? I suspect it is the former, whereas logically it could be the latter. I do not propose to divide the House on this issue, and I rather suspect I would not win if I did, but we should have honest answers to serious questions and not treat this whole issue as if it is a matter of virtue signalling.