Net Zero, Energy and Transport Committee

Meeting date: Tuesday, November 21, 2023

Official Report 728KB pdf

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Subordinate Legislation

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Vehicle Emissions Trading Schemes Order 2023 [Draft]

Item 2 is consideration of a draft statutory instrument, the Vehicle Emissions Trading Schemes Order 2023, which is a joint instrument between the Scottish, United Kingdom and Welsh Governments. It is subject to affirmative procedure and cannot come into force until it has been approved by the Scottish Parliament, Welsh Senedd and both Houses of the UK Parliament. On the scrutiny in the Scottish Parliament so far, the Delegated Powers and Law Reform Committee had no observations on the instrument.

As with other affirmative instruments, we will have an evidence session prior to the formal debate and I am pleased to welcome the Cabinet Secretary for Transport, Net Zero and Just Transition, Màiri McAllan. She is joined by Natalie Milligan, a solicitor in the Scottish Government and Morna Cannon, interim director of the low carbon economy directorate, Transport Scotland. Thank you all for joining us.

Following this evidence session, the committee will be invited at the next agenda item to consider a motion for the committee to recommend that the instrument be approved. I remind everyone that the cabinet secretary’s officials can speak under this item but not in the debate that follows. I invite the cabinet secretary to make an opening statement. The paperwork contains a lot of three-letter and four-letter acronyms that are very confusing, so I hope that you will make them clear. Thank you, cabinet secretary.

I will do my best, convener, thank you very much. I begin by apologising for the slight delay in getting started this morning and thanking you for inviting me to the committee today to discuss the draft Vehicle Emissions Trading Schemes Order or as it is more commonly known, the zero-emissions vehicle—ZEV—mandate.

We know that we urgently need solutions to support our journey to net zero and that critical to that is the decarbonisation of transport. Transport is the largest contributor to Scottish greenhouse gas emissions, making up 29 per cent of all emissions in 2019, and road transport contributes 66 per cent of those emissions. It is critical that the Government does its utmost to ensure that everyone has options for cleaner and greener ways of getting out and about in a way that is cognisant of their way of life.

Working jointly with the UK Government, the Welsh Government and Northern Ireland’s Department for Infrastructure, I am bringing the draft Vehicle Emissions Trading Schemes Order to the committee for consideration today. The schemes will put legal obligations on car and van manufacturers in the UK to sell zero emissions vehicles each year and for a percentage of their sales to constitute zero emissions vehicles, ramping up from 22 per cent of all those sold in 2024 to 80 per cent of new cars in 2030. [Màiri McAllan has corrected this contribution. See end of report.] In parallel, the CO₂ standards schemes for new non-zero emissions cars and vans will help to drive down the emissions of the manufacturers’ new petrol and diesel car and van fleets. They work in parallel and bear down in different directions.

The cost-benefit analysis estimates that, under these schemes alone, 420 million tonnes of carbon dioxide in carbon emissions would be saved across the UK by 2050. The figure for Scotland alone is around 40 million tonnes of carbon dioxide. I will bring to the committee’s attention that it is intended there will be a mid-point review to monitor the implementation of the schemes. That will be done on a four-nations basis and published in quarter 1 of 2027.

The Climate Change Committee supports the introduction of the schemes. It has highlighted how important they are, stating:

“The switch to electric cars and vans is the largest single driver of future emissions reduction in the UK’s Net Zero pathway. The mandate will be vital in delivering these savings.”

We know that it is critical for everyone in every part of Scotland, and we have been cognisant of that when designing the schemes. We have asked for the inclusion of analysis of the impact on remote and rural communities in the cost-benefit analysis. Although the schemes were designed on a four-nations basis, the Scottish Government was able to ask for that and to have it done.

We are bringing the schemes forward in the context of the Prime Minister’s recent announcement to push the UK ban on non-zero cars and vans back from 2030 to 2035. My colleague Julie James in the Welsh Senedd noted that the ZEV mandate is a way of providing certainty with that change having taken place and, as she put it, of holding the UK Government’s feet to the fire.

I hope that we can agree that the shift to net zero cars and vans is an important part of how we move to a just transition to net zero and I ask the committee to endorse the draft legislation. Thank you.

Thank you, cabinet secretary. As I understand it, the UK Government is changing its target to 2035, but it is still signed up to the schemes and will be dealing with them in exactly the same way as Wales and Scotland are. Is that correct?

That is correct. In the days after the Prime Minister’s announcement, we continued to work with the UK, Wales and the Northern Ireland Executive on the scheme. In my view, it will be a helpful way of reintroducing the certainty that the Prime Minister’s announcement removed.

It is quite complicated, and I thank you for all the examples and the formulas that are used to work out who gets charged for what, but if a manufacturer reduces the CO₂ emissions of a vehicle that it produces to below the previous standard, technically the order is saying that it will not be penalised for that. In fact, it could produce more until the limit that was set has been reached. Is that correct?

It will work in two different directions. The sale of zero emissions vehicles as a percentage of the total is quite straightforward. The other part of it, the bearing down on the emissions from non-zero vehicles, is a little bit more complicated but I have taken some time to formulate an example, which I can give to the committee if that would be helpful.

Any example to illustrate this would be helpful. We had lots in the paperwork that was produced and, just as I thought I had tied it down, it seemed to move. It would be helpful if you could give me an example.

I will read aloud the one that my officials and I worked out and we can pause and take questions on any part of it that you wish to have clarified.

If manufacturer A has a target of 140g of CO₂ per kilometre driven across the whole fleet of new cars, and that is based on the average that was registered in 2021, if in 2024 they sell and register 10,000 new cars with average emissions of 140g of CO₂ per kilometre driven, they will be allocated 1.4 million allowances by the administrator, based on the 2021 average. If the average emissions of those 10,000 new cars sold was 130g, manufacturer A would have a surplus of 100,000 allowances and could trade them with other manufacturers or convert them to credits—there is a mandate car scheme. It is a similar model to the cap and trade model for emissions trading schemes generally. I was here not that long ago discussing some of the developments in emissions trading schemes, but that is how it will work.

Of course, that is just one part of it. The other part is requirement for the overall percentage of cars sold to be zero emissions having to increase gradually to 80 per cent by 2030.

My final question before I open it up to the rest of the committee is about whether car manufacturers are happy with this, understand it and want to see it move forward at pace. Is that what you are going to tell us?

Well, largely. We do not have domestic car and van manufacturers in Scotland. We have Alexander Dennis, the bus manufacturer, but buses are not part of the scheme, so we have not had to look particularly closely at that, although colleagues in the other nations have. We have 10 per cent of the UK dealerships in Scotland and we have reached out to them. We met representatives from Arnold Clark recently and they raised no concerns, but we have agreed to keep in touch with them. Another particular Scottish interest in business is—

Allied Vehicles.

—Allied Vehicles, who are specialists in converting non-zero, standard petrol and diesel cars into wheelchair friendly vehicles. It has raised some concerns about how it will operate the new allowances system. We have set up a working group with it as part of the work with the four nations. We met recently, set terms of reference and have agreed to monitor the impact of the scheme on its ability to continue retrofitting cars to be wheelchair compliant.

Cabinet secretary, I am looking at Transport Scotland’s website and it says:

“By 2030 we will phase out the need to buy new petrol and diesel cars and vans.”

To confirm, has that changed now to 2035 to be in line with the rest of the UK?

It has not changed. That is a reasonable observation. All our primary transport policies are under consideration as part of the development of the climate change plan. Our commitment to phase out the need for petrol and diesel by 2030 has not changed. I should point out that Scotland does not have the power to ban, so it is very much about phasing out the need. I think that the ZEV mandate will contribute positively to that, with more zero emissions vehicles being available, prices being driven down and so on. It is the floor to our ambition rather than the ceiling. We will bring in other policies to support phasing out the need for petrol and diesel by 2030, including seeking a modal shift in a 20 per cent reduction in car kilometres driven. It will be a package of measures, of which this is an important part.

09:30  

To confirm, your target is still 2030 although legally it will not be required until 2035; is that correct?

Scotland does not have the power to ban. The UK has recently decided to put its target back to 2035, having been in line with ours. It is still our aim to phase out the need for a new fossil fuel car by 2030, even if it is five years in advance of a UK ban.

You will encourage people to make this switch by 2030. If that is the case, will the charging infrastructure be in place by 2030 to enable people to make that switch if they want to?

It is absolutely about encouraging people and creating the circumstances in which it is possible for people not to need to buy a new fossil fuel car.

I accept that growth in the charging infrastructure will be required to support the transition towards zero emissions vehicles. Currently, as you will have heard me say a number of times, we are in a good position. Department for Transport statistics recently restated that Scotland has the second most comprehensive public charging network in the UK, outside of London. We have invested tens of millions of pounds in that. My colleague Fiona Hyslop recently announced our new vision for public charging in Scotland, which looks to take us to 6,000 public charging points by 2030, with £60 million of investment, some of which will be public investment, some of which will leverage in private investment. [Màiri McAllan has corrected this contribution. See end of report.] We are in the early days of working with local authorities on their plans and how to do that.

Sorry, I am going to be a little bit difficult here. This item is about the vehicle emissions trading scheme and Douglas Lumsden has neatly segued into the subject of electric vehicle charging points. The cabinet secretary has been minded to answer, but I think that you are pushing a wee bit on the envelope of the agenda. It would be helpful if I could drag you back gently to the trading scheme.

Convener, I was just trying to work out how we would get to the scheme that is laid out in front of us, but I will stop there.

Thank you. As there are no more questions, we will move on to item 3, which is a debate on the motion calling for the committee to recommend approval of the draft Vehicle Emissions Trading Schemes Order 2023. I invite the cabinet secretary to move the motion.

Motion moved,

That the Net Zero, Energy and Transport Committee recommends that the Vehicle Emissions Trading Schemes Order 2023 [draft] be approved.—[Màiri McAllan]

Motion agreed to.

The committee will report on the outcome of the order in due course, and I invite committee members to delegate authority to me as convener to finalise the report for publication. Are you happy that I do that?

Members indicated agreement.

Thank you, cabinet secretary and your officials, for attending.

09:34 Meeting suspended.  

09:37 On resuming—