Wednesday, 23 August 2017

Diesel Scrappage - Confused Messages?

There continues to be much chatter about diesel car scrappage schemes and, indeed, the launch of various bespoke initiatives by several manufacturers. What does this all mean and how is the proverbial "man in the street" likely to react.

The current round of angst is mainly around NOx emissions from diesel engines, coupled in varying degrees to particulate production. These pollutants are produced in greater quantities by diesel engines than by their petrol equivalents; and some 40% of the cars on the UK's roads are diesel powered following the successful push to promote these vehicles over petrol ones because of their better CO2 emission characteristics.

The currently proposed schemes mostly target Euro 1 to Euro 4 standard cars - some explicitly, some implicitly through defining a registration date cut off. Most schemes are diesel only, although the recently announced Ford one is for petrol engines as well. In some cases the new purchase has a threshold CO2 emissions limit, but this doesn't appear to be the case universally. Electric vehicles would seem to be another thing altogether (the still steep development curve and the problem of how the electricity is generated in the first place being two rather large elephants in that particular room). And let's not beat around the bush - new cars sales are on the wane so manufacturers will want to find ways of promoting their uptake. A scrappage scheme is not a bad "vehicle" to achieve this.

This could all be a tad confusing to the average punter. Should HMG be stepping in and running a national scheme? This has the potential of levelling the playing field but possibly on a "lowest common denominator" basis. Also I suspect that at Treasury level there is little appetite for such public expenditure.

I rather think that while manufacturers are taking a lead, however confusingly, HMG will be content to let them run ahead. There may be some tinkering with vehicle excise duty - but here HMG will be wary of angering those drivers who purchased Euro 5 and Euro 6 diesel models in good faith because of their CO2 emission characteristics.

Considering pollution generally all schemes would appear to be beneficial as far as NOx and particulates are concerned. CO emission may rise - the limits on petrol cars are twice those on diesel ones. For CO2? Probably beneficial again, but this is one area where the waters do seem really muddy and if there is one thing the manufacturers could do that is to incentivise CO2 reduction as an adjunct to other benefits in their schemes.

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