Diesel scrappage scheme – but what about the subsidised polluters on our streets?

According to a recent news report, Transport Secretary Chris Grayling is thinking of introducing a diesel scrappage scheme. If so, not a moment too soon. Air pollution in Britain kills around 50,000 people per year, and in cities diesel is the biggest culprit.

The scheme would reportedly provide financial incentives to scrap the oldest vehicles in the areas where pollution is worst – meaning Britain’s cities. This also makes perfect sense; by one measure, London reached its annual pollution limit on 5 January.

Any move to reduce the number of diesels on the road should be welcomed, but a conventional scrappage scheme would do nothing to tackle the heaviest polluters, and its purpose would be undermined by existing subsidies that perversely support continued pollution. Before we start spending taxpayer’s money to take diesel cars off the road the government should consider two minor reforms that would cost nothing and target the vehicles that emit the most.

During Dieselgate it emerged that the real-world emissions of Euro 6 diesel cars were on average seven times higher than the legal limit. But independent transport refrigeration units – TRUs, the secondary diesel engines used to provide cooling on refrigerated trucks and trailers delivering food to our shops, restaurants and increasingly our homes – emit far more. Analysis has shown that a TRU emits up to 93 times more nitrogen oxides (NOx) and 165 times more particulate matter (PM) than the emissions limits of a Euro 6 diesel car.

Worse, independent TRUs are entitled to run on half price ‘red’ diesel, meaning we not only tolerate their grossly disproportionate emissions but also subsidise them. TRUs are allowed to run on red diesel because they are classed – bizarrely – as ‘Non Road Mobile Machinery’, even though they operate on a truck or trailer. But there is no conceivable economic justification for continuing to subsidise such a mature and highly polluting technology against new zero-emission competitors. Britain is one of only a handful of countries in the EU that still permits this.

The two simple measures that could do most to reduce vehicle emissions quickly would be to (i) set a date (2022 i.e. five years from now) by which diesel TRUs will be banned in Britain’s cities (allowing time for natural replacement so all new TRUs are zero-emission), but (ii) and with immediate effect, scrap the red diesel subsidy for TRUs everywhere. Banning diesel TRUs in London alone would be the PM equivalent of taking more than 300,000 Euro 6 diesel cars off the road and Imagine what replacing 300,000 would cost under a scrappage scheme. It is hard to see the cash-back being set at less than ￡1000 per car, so banning diesel TRUs in London alone could effectively save the exchequer ￡300 million. It would also reduce CO2 emissions by 49,000 tonnes, equivalent to driving a family car 447 million kilometres – almost 2.4 million laps around the M25. And by setting a practical date now, the transition can be planned for by the supermarkets and food industry and as new vehicles are put on the road, rather than demand existing units to be scrapped and replaced.

It makes sense to tackle TRU emissions because they grossly disproportionate emitters, the number of vehicles affected would be small – 84,000 in the entire country - and market-ready zero-emission alternatives are available. We must though scrap red diesel now for TRUs not just because it is morally wrong, but because it prevents new clean cold technologies from taking off. Analysis of four zero emission TRU technologies - battery electric, hydrogen, liquid nitrogen evaporation, and liquid air cold and power – showed that all bar hydrogen would have lower lifecycle costs than TRUs running on unsubsidised road diesel, but that none could compete with red diesel. This loophole has to go.

Because of the way supermarkets and big logistics operators work, banning diesel TRUs in Britain’s cities would lead to their being phased out throughout the country, with enormous health benefits. A report published in 2015, Liquid Air on the European Highway, found that if nothing is done, the health and other social costs of TRU emissions in Britain will rise to ￡123 million per year by 2025, but if the country converted to zero-emission TRUs over the next ten years, the cumulative savings could amount to more than ￡502 million.

The government has already wisely invested tens of millions of pounds to support early stage clean cold technologies. The measures I propose would provide the necessary ‘market pull’ to make those technologies fully commercial, creating a platform for future exports and jobs. It is also exactly the kind of technology-neutral, sector support proposed under the government’s new industrial strategy.