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  • Advice to fleets following the diesel scrappage proposal

    Diesel scrappage

    Mayor of London, Sadiq Khan, has recently been urging the Government to introduce a nationwide diesel scrappage scheme for cars and vans. In a bid to meet legal obligations on air quality the scrappage scheme will seek to improve pollution levels and take the financial responsibility of doing so away from the individual.

    The diesel scrappage scheme would offer a discount on low emission cars if people trade in their old, polluting diesel vehicles. Diesel scrappage funds would see the older technology diesel cars and vans, typically those registered before 2006, exchanged for financial compensation. However, fleets will also need to consider the possible rise in business motor fleet insurance premiums and maintenance costs.

    What is the Diesel Scrappage scheme recommending?

    The proposal for a dirty diesel scrappage fund aims to reduce the cost of upgrading older diesel vehicles to cleaner vehicles to those least able to afford doing so. The key areas of funding would include:

    • payments of £3,500 to scrap up to 70,000 polluting vans and minibuses that fall below the Euro 6 standard in London and a National fund to support charities and small businesses.
    • a credit scheme of £2,000 for low-income households in cities to scrap up to 130,000 polluting cars in favour of a mobility package.
    • payments of £1,000 to scrap up to 10,000 older diesel taxis and help to switch to zero-emission models.

    With many organisations and charities already backing the diesel scrappage proposals, and the EU threatening to take Britain to court if it breaches air pollution limits again, Government just need to be convinced and the minister is thought to be in approval.

    Sadiq Khan said; “I am pleased that a broad alliance of business organisations and environmental charities are backing my plans for a national diesel scrappage. Now is the time for the Government to take urgent and decisive action to help get the most polluting vehicles off our roads in a fair and reasonable manner.”

    Background to the demise of diesel

    Diesel has been the fleet fuel choice for many years. Back in 2001 motorists and businesses alike were encouraged to drive diesel vehicles by offering lower tax rates, as they were found to produce less CO2 than their petrol equivalents.

    However, the nitrogen dioxide (NOx) emissions produced by diesel have since been found to be up to four times higher and this is extremely hazardous to public health and has been directly linked to respiratory and circulatory diseases.

    Diesel has since received a bad rap in the press and alternative fuels are now making the headlines. It took ministers nearly a decade to admit they had overlooked these health consequences which is why tax implications have now been re-introduced.

    According to SMMT figures, the sales of diesel cars have already fallen by 4.3% in January 2017 compared to the same period last year. The image of diesel has fallen from grace over the past few years with the VW dieselgate scandal and illegal levels of pollution recorded in major UK cities being big contributors to this. There is also evidence to show that diesel NOx emissions are contributing to the early deaths of 40,000 people per year.

    What should Fleet Managers do in response to the Diesel Scrappage proposals?  

    Are diesel fleet cars doomed in the UK? The answer in no, diesel power is still a good tool for the job, particularly where drivers are traveling long distances. Fleet Managers should consider the overall composition of their fleet and which fuel models are correct for which job.

    Fleet Managers should however be preparing themselves for possibility of additional policies that are punitive to diesel cars and encourage the uptake of alternatively-fuelled vehicles. Other Cities such as Paris, Mexico, Madrid and Athens are all looking to ban diesel cars in their city centres by 2025.

    In London, Sadiq Khan recently introduced the new £10 toxicity charge, also known as the ‘T-Charge’, where from October 23rd this year petrol and diesel cars with pre-Euro 4 engines will pay an additional charge to drive into central London. This is in addition to the current £11.50 congestion charge, and Khan also has plans to introduce the world’s first Ultra Low Emissions Zone (ULEZ) in London by 2019 which will in future be expanded to the North and South Circular Roads.
    However, there is still an important role for the latest Euro 6 diesel cars and vans to play in a company’s fleet. These vehicles still have lower running costs and many environmental benefits when compared to petrol equivalents.

    On average, diesels use 20% less fuel than like for like petrol models as well as offering 20% lower CO2 emissions than petrol equivalents. It is also worth noting that diesel vehicles are not the only source of NOx and that nearly a quarter of all NOx emissions come from coal and other energy plants

    Whilst diesel vehicles are being knocked for their emissions, it is really the older vehicles that are most to blame. Euro 6 vehicles are in fact the cleanest in history and as well as offering special filters, they also convert most of the NOx from the engine into harmless nitrogen and water before reaching the exhaust. The latest Euro 6 cars are classed as low emission for the purposes of the ULEZ due to come into force in 2019, so drivers with these vehicles will be able to enter the zone without charge.

    What are the fleet insurance implications of a diesel scrappage scheme?

    Fleet Insurance costs will change as you upgrade to different fuel options, and currently due to the relatively young age of alternative fuel cars their fleet insurance costs tend to be higher. We would advise speaking to a Bluedrop Fleet Insurance specialist if you are considering alternatively fuelled vehicles and would like some advice or a quote. We will use our experience and expertise to find and recommend the best policy for you.

    One thing to consider though will be the offset mileage costs which reduce from around 12p per mile for a standard diesel fleet car to about 3p per mile for an electric vehicle.

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