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10th October 2007

The 2007 Budget announced a review of vehicle and fuel technologies which could help to decarbonise road transport, particularly cars, over the next 25 years, led by Professor Julia King, Vice Chancellor of Aston University, working with Sir Nicholas Stern. Professor King’s interim analytical report (http://www.hm-treasury.gov.uk/media/9/5/pbr_csr07_king840.pdf) was published yesterday alongside the Pre-Budget Report.

Part I: ‘The potential for CO2 reduction’ sets out the environmental challenge for road transport and looks at the scope for emissions savings from more efficient vehicle technologies, cleaner fuels and smart consumer choices.

The final part of the King Review will report in 2008 and will offer policy recommendations to help meet the challenge set out in Part I.

The interim report suggests that in the long-term (possibly by 2050 in the developed world), almost complete ‘decarbonisation’ of road transport is a possibility.

If substantial progress can be made in solving electric vehicle technology challenges and, critically, the power-sector can be decarbonised and expanded to supply a large proportion of road transport demand, around a 90% reduction per kilometre emissions would be achievable across the fleet. If the rate of road transport growth projected by last year’s Eddington report on transport continues, and road use in the UK approximately doubles by 2050, this could deliver an 80% reduction in total road transport CO2 emissions, relative to 2000 levels.

As well as focusing now on the technologies that can achieve the long-term objective of decarbonising road transport, the interim King report says it is important to start reducing emissions in the short term, through development and implementation of improvements to established automotive technologies; emissions avoided now are more valuable than those saved later. This Review's analysis indicates that, by 2030, emissions per kilometre could be around 50% below 2000 levels. This would be partly offset by the projected increase in distance travelled, implying an overall reduction in UK emissions from car use of approximately 30% by 2030.

To achieve this goal substantial progress is needed across the board: cleaner fuels; more efficient vehicles; and smart driver choices.

The report considers all fuels based on their life-cycle CO2 emissions. From the “well” (or the equivalent energy source) to the “wheel”, different fuels result in CO2 emissions at different stages of their production, transport and use. Even conventional fuels, such as petrol and diesel, can be produced in a variety of ways, with very different CO2 impacts.

Biofuels, in moderation, are acknowledged to offer potential advantages over conventional fuels and can occupy part of the transport fuels market over the medium term. But the report says an over-reliance on biofuels, particularly in these early stages, could be counter-productive, putting the world's environmental resources under pressure. Globally, care needs to be taken not to over-expand biofuels demand before technological improvements and comprehensive sustainability safeguards are in place.

In the long term, carbon-free road transport fuel is the only way to achieve an 80-90% reduction in emissions. Given biofuels supply constraints, this will require a form of electric vehicle, with novel batteries, charged by “zero-carbon” electricity (or, possibly, hydrogen produced from zero-carbon sources).

Clean cars, notes the report, are dependent on clean power and, as the world moves towards electric vehicles, countries' road transport CO2 emissions will increasingly be determined by the composition of their power generation sector. Major changes in power generation therefore need to be delivered alongside the automotive technologies. Making progress on decarbonising power generation represents an even more urgent challenge than electric vehicle technologies because of the time it takes to implement. It is essential, says the King report, to take a system-wide perspective and to consider displacement effects and competition for power across sectors: ultimately, decarbonisation of road transport will require decarbonisation of power generation.

The report says that in the nearer term, considerable CO2 savings can be achieved through enhancements to conventional vehicle systems. Technology that can reduce CO2 emissions per car by 30% (on a like-for-like basis) is already close to market and could be standard within 5-10 years. Despite the likely vehicle cost increases (estimated at £1,000-£1,500 per new vehicle), many of these changes are likely to represent good economics to the purchaser, as a result of their impact on fuel economy. However, demand-side and supply-side barriers are currently delaying their deployment. Ensuring these technologies are quickly brought to market constitutes a major policy challenge and will have a major impact on emissions reductions from road transport in the coming years.

Cars that emit 50% less CO2 per kilometre than the equivalent current models could be on the road by 2030, subject to advances in hybrid and battery technologies and industry overcoming cost barriers. Longer term, vehicle technologies to enable a 90% reduction in per kilometre emissions, most likely based on battery-electric propulsion systems, are expected to be found feasible.

Achieving this maximum benefit, however, is dependent on very low-CO2 power generation.

The King report notes that the UK industry currently has strengths in engine manufacture, and high-tech vehicle and systems design and consultancy. There are opportunities for the UK to develop further in both licensing and supplying low-carbon technologies to the mass-market manufacturers, and as a leader in some areas of the electric vehicle market. Long term, with the right approach now, the UK could play a strong role in future electric systems, novel battery and energy storage solutions and in other areas such as biofuels development.

(http://www.hm-treasury.gov.uk/media/9/5/pbr_csr07_king840.pdf)

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