Sheena McGuinness

Written by: Sheena McGuinness

Sheena McGuinness

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When petrol and diesel cars are banned, what will replace fuel duty?

Last week, the Government announced its plans to bring forward the ban on the sale of new petrol, diesel and hybrid cars by five years to 2035.

What is interesting about the announcement is that hybrid cars are now included in the 2035 ban. It has been predicted by renewables experts that hybrids will be the Betamax of the net-zero world and that 2020 will be the year that the hybrid will be consigned to the scrap heap. It seems these predictions may come to fruition. 

The fact is that the hybrid generally has a range of about 30 miles. And once the electric charge has expired the combustion engine is lugging around a heavy lithium battery, which is more expensive in fuel costs and also more harmful to the environment. So full marks to the Government for recognising this issue.

The Committee on Climate Change believes the cost of electric vehicles (EVs) will be similar to that of petrol or diesel vehicles by 2024-25. However, the cost of running EVs is unlikely to remain at the same low level as it stands today – particularly for owners who generate their own domestic electricity through rooftop solar panels. 

Currently fuel duties contribute approximately 4.5 per cent (excluding VAT) to the UK’s tax take. The reduction in petrol and diesel cars will have a correlating decrease in the fuel duties. The UK Government simply cannot afford to forfeit some £28bn and so the fuel duty will have to be replaced with something. Either an increase in the general burden of tax or, as is currently mooted, a system of taxation on road usage with the 'dirty' petrol and diesel cars attracting a higher rate per mile than an EV or hydrogen car.

With costs falling, new models such as Porsche, Audi and Mercedes coming onto the market, and even James Bond rumoured to be driving an EV, the electric vehicle is fast becoming the coolest of cars to own. However, Bond better hope the latest nemesis he is chasing avoids Oxford and Norwich where, if his battery runs low, he’d be heaving his car some 6 to 10km to the nearest charging station. This illustrates the key problem: there are huge disparities between local authorities and their car-charging provisions. If the country is to switch to EVs, the speed of installing charging points will have to radically increase to cope with demand.

So while the technology is advancing and the performance of the likes of Tesla and Porsche Taycan is much exalted by car enthusiasts, the supply of charging points and investment in infrastructure is lamentable. It has been estimated that the UK needs to have 25 million charging points for EVs to make this a viable alternative to the combustion engine. There are currently 11,000 places in the UK for charging EVs. This is something that will need to be addressed if the transition to a carbon free system of private transportation is to be anything less than a bumpy ride.

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