Decarbonisation of transport “could save households £22bn”
Decarbonising UK transport could save households £22 billion by 2035, according to new analysis from the Resolution Foundation published today (17 October).
The claim comes in the Getting the green light report, funded by the European Climate Foundation. It states that 60% of the savings associated with the overall net zero transition are due to cheaper transport, according to CCC figures.
If done “properly”, it could mean annual savings of £650 per household on average by the middle of the next decade – adding up to the £22bn figure.
It said the electrification of road travel was “where the majority of potential savings lie” and highlighted how the ZEV mandate was “right” to bring more EVs to market. It also pointed to salary sacrifice schemes and other incentives as assisting in the transition.
But it said that the current incentives for the richest tenth of households, who see a saving of 42% in purchasing an EV, should be scrapped as a “poor use of a subsidy” and should be scrapped with cash “instead spent for the benefit of all EV users”.
The report notes that EV drivers stand to benefit from the lower cost of electricity compared to petrol, but pointed to the issues around the price of public charging and the VAT divide. It said creating public charging parity with home charging of 5% VAT – rather than 20% – would be a “quick and simple solution”, although it would cost the Treasury around £700m.
It said though “in the longer term, ministers need to break up local monopolies on public chargers, or even step in to regulate prices”.
Jonathan Marshall, Principal Economist at the Resolution Foundation, said:
“If the UK is to reach net zero by 2050, we need to decarbonise travel, and fast. That’s no easy task when it makes up a third of our carbon emissions. But the cash prize for doing so could be huge, with more than £20 billion of annual savings on the table by the mid-2030s.
“The transition to EVs promises to reduce costs to motorists. However, the risk is that without further policy changes those savings could all go to richer households.
“But with universally affordable charging for electric vehicles, targeted discounts for public transport, and more comprehensive carbon pricing for those reluctant to ditch their frequent flights, a fair transition is very much within our reach.”
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