Road Turning Bumpy for Drop in U.K. CO2 Emissions

Average new-car emissions fell 1.1% year-on-year to a record low in the U.K. last year, but the industry fears anti-diesel sentiment and new taxes will break the fall.

The Society of Motor Manufacturers and Traders says 2016 was the 19th consecutive year of decline as the auto industry again beat carbon-dioxide targets.

But the SMMT says there’s great concern the current anti-diesel agenda – which it says fails to distinguish between old models and newer, cleaner vehicles – could curtail further CO2 reductions.

The industry group’s annual New Car CO2 Report shows carbon tailpipe emissions fell to an average of just 120.1 g/km kast year. Average CO2 emissions from new vans fell 1.9% to a new low of 173.7 g/km, ahead of the 2017 deadline for the Europe-wide target of 175 g/km.

The SMMT credits the reductions to billions of pounds’ worth of investment in new and advanced engine, fuel and battery technology, as well as the increased use of lightweight materials such as aluminum and composites.

The growing alternatively fueled vehicle market and the consumer shift toward diesel cars, which emit on average 20% lower CO2 than their gasoline equivalents, also has been critical to the success.

But the changes in consumer buying behavior away from diesel seen in 2016 have caused the rate of progress to slow. U.K. motorists registered a record number of diesel cars in 2016, but market share for this fuel type fell 0.8 percentage points.

The U.K. has Europe’s largest market for zero-emissions-capable cars, accounting for 23.8% of electric and plug-in hybrid sales in the European Union in 2016, but growth in AFV demand slowed from 40.3% in 2015 to 22.2% last year.

The preference for SUVs over smaller cars also has slowed progress on CO2 reduction.

If these trends continue, the SMMT says, the U.K.’s contribution toward the EU target of 95 g/km average CO2 in 2021 will become tougher, requiring a 20.9% cut in CO2 emissions over the next five years, or 4.6% a year.

SMMT CEO Mike Hawes says the U.K. auto industry has some of the most challenging CO2 reduction targets of any sector, but continues to cut as it has for nearly two decades.

“For this positive trend to continue, modern low-emission diesels and AFVs such as plug-ins, hydrogen (fuel-cell vehicles) and hybrids must be encouraged with long-term incentives,” he says.

“Turning our back on any of these will undermine progress on CO2 targets as well as air-quality objectives. The U.K. has a successful track record in encouraging these new technologies, but this must be maintained through a consistent approach to fiscal and other incentives.”

That’s a reference to government changes to vehicle excise duty taking effect April 1.

Under the new system, 66% of the alternatively fueled vehicles now subject to no annual tax will be assessed a yearly flat charge of £130 ($160), in addition to varying levels of first-year tax.

The SMMT says a £310 ($380) surcharge for five years for cars with a showroom price of £40,000 ($49,133) could affect demand for some of the lowest-emitting vehicles, which invariably are more expensive than conventional technologies.

“As a result, take up of innovative technology such as hydrogen fuel cell and plug-in hybrid vehicles could suffer,” it says.

Gerry Keaney, CEO of the British Vehicle Rental and Leasing Assn., says the average leased car added to a member’s fleet in 2016 emitted just 110.8 g/km of CO2, down 7.7% from the previous year.

But Keaney also is concerned the new taxes will end the annual gains.

“This trend of falling CO2 emissions could be about to end as the government goes in search of greater tax revenues, particularly from company-car drivers,” he says.

“Policymakers need to recognize that motoring and business-car taxation is more than just a revenue stream. It can provide a powerful incentive for people and businesses to choose low-emission cars. With poorly designed tax incentives, the government could be putting the brakes on sales of low-emissions cars.”