The Scottish Government

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2. Current policy and targets

Current policy governing vehicle emissions and alternative fuels is located at three different levels - European Union ( EU), reserved to the United Kingdom ( UK) and Scottish Government. This chapter provides an overview of policies relevant to both target setting and uptake of LCVs in Scotland.

2.1 EU Directives

At a European level, the Directive on Energy End-use Efficiency and Energy Services ⁸ recognises that "the motor fuel and transport sectors have an important role to play regarding energy efficiency and energy savings" and aims to improve energy end-use efficiency. It applies to all forms of energy, including transport fuels.

Article 5 and Annex VI of the Directive include a requirement for Member States to purchase vehicles based on lists of energy-efficient product specifications using, where applicable, minimised life-cycle cost analysis or comparable methods to ensure cost effectiveness. It also sets a voluntary standard for the inclusion of environmental priorities in the procurement of public sector vehicles and will come into force later this year.

The Directive on the Promotion of Clean and Energy Efficient Road Transport Vehicles ⁹ includes a statutory obligation on Member States to take into account environmental impacts of vehicles during public sector procurement. Three options for complying are presented:

• setting technical specifications for purchase;
• using impacts as awards criteria during procurement; or
• monetising the impacts using a defined methodology.

The Directive is due to come into force in around 18 months time and, as it falls within devolved responsibilities, will require transposition into domestic legislation by the Scottish Parliament .

In addition, two EU directives are likely to involve increased use of biofuels and alternative technologies. Under the Renewable Energy Directive ¹⁰ ( RED) 10% of transport fuels must comprise renewable energy by 2020 (transport fuels include petrol, diesel, biofuels used in land transport, and electricity). This is part of a wider target of 15% of energy in the UK, and 20% across the EU, to be renewable by 2020. The Fuel Quality Directive ¹¹ ( FQD) on the other hand requires fuel suppliers to reduce emissions by 6% by 2020. The RED and the FQD have almost completed their EU legislative process.

A regulation on new car CO _2, adopted on 23 April 2009 ¹², requires manufacturers to reduce their new car fleet average emissions. An initial target of 130gm CO ₂/km has been set and is to be phased in from 2012 with full compliance by 2015. A longer term target of 95gCO ₂/km has been set for 2020. The EU is also progressing a number of complementary measures to support the new car CO ₂ regulation, including mandating tyre pressure monitoring systems and gear shift indicators. In addition, the European Commission is expected to bring forward a proposal on CO ₂ from vans later in 2009.

The Car Labelling Directive ¹³ requires dealers selling new passenger cars to display information on vehicles' fuel consumption and CO ₂ emissions.

2.2 Reserved UK Policies

The Scottish Government liaises closely with the UK Government on reserved policies which have an impact on Scotland. These include reserved transport policies.

The Renewable Transport Fuel Obligation ( RFTO) was introduced in April 2008. It transposes the EU Directive on the promotion of biofuels ¹⁴. It places an obligation on suppliers of fossil fuels to ensure that a proportion of the road fuels they supply in the UK comprise biofuels. The effect of this was to require 5% of all UK fuel sold on UK forecourts to come from a renewable source by 2010. This target has been amended in light of the Gallagher Review ¹⁵ on the sustainability of biofuels and the 5% target will not be reached until 2013/14. The DfT, with input from the Scottish Government and the Scotland Office, will consult on the implementation of the RED this summer, and the accompanying Impact Assessment will look at implications of the RTFO for Scotland.

In January 2009, the Secretary of State for Transport announced a £250 million package to help build the market for ultra-low emission vehicles. The bulk of the funds will be used from 2011 onwards to help offset the premium on the expected higher purchase prices of electric and plug-in hybrid cars. This funding package will be open to people in Scotland. The amount of subsidy to be offered to the public is expected to be between £2,000 and £5,000 per vehicle. In addition, up to £20 million will be available to develop an electric vehicle charging infrastructure framework to help consortia of cities, regions, private businesses and utility companies create a UK network of electric car cities. The DfT will be setting out detailed eligibility criteria for both schemes later this year.

The DfT announced a £20m public procurement programme in May 2007, to help stimulate the market for LCVs. The programme is initially focussed on vans. The programme will also be supporting demonstrations of ultra-low carbon cars in a number of locations around the UK. Glasgow City Council is participating in the programme, and the Scottish Government is exploring and monitoring issues in relation to this scheme.

Reserved fiscal policies include reform to Vehicle Excise Duty ( VED) which means that from 1 May 2009, cars emitting less than 100g/km are exempt from VED.

National Conversation
While many transport functions are already devolved to the Scottish Parliament, many of the issues raised in this consultation relate to policies and programmes which are reserved to the UK Government. The Scottish Government is promoting a National Conversation to give individuals, communities, and organisations across Scotland the opportunity to examine and debate their views about how Scotland should be governed in the future and make an informed choice about constitutional reform or independence.
For example, if Scotland were to be an independent country, it would have full fiscal autonomy. The Scottish Government would therefore have powers to set and levy fuel taxes and vehicle excise duties at levels that would encourage the uptake of LCVs.

2.3 Scottish Government Policies

This chapter provides the Scottish Government policy context for LCVs.

2.3.1 Climate change policy

The Scottish Government's overarching Purpose is to increase sustainable economic growth. The sustainability element is reflected in the statutory mitigation targets contained within the Climate Change (Scotland) Bill.

2.3.2 Transport policy

As part of the transport contribution to reduced emissions, the Scottish Government intends to set ambitious commitments and targets for LCVs. The basis for this stems from its 2007 manifesto commitments:

• set an ambitious target for the use of alternative road fuels
• begin early consultations on the most effective target for the use of biofuels and hydrogen powered vehicles, and put forward as a starting point for discussion a twin target of a 100% use of alternative powered vehicles by public sector vehicles by 2020 combined with a national target of 30% for other road users; and
• as part of this commitment examine incentives for industry to develop biofuels in Scotland and for road users to make greater use of these lower emission fuels.

Since 2007, a number of reports and studies have been published which have broadened our evidence base for considering targets. In particular, recent concerns about some of the negative impacts of first generation biofuels indicate that we must continue to take full account of all the impacts of the production and use of biofuels. The Scottish Government therefore supports the recommendations of the Gallagher Review referenced above.

However, the principles of these commitments remain the same: ambitious targets for LCV uptake led by the public sector to reduce emissions and stimulate the Scottish economy.

2.3.3 The National Transport Strategy

Scotland's National Transport Strategy ¹⁶ ( NTS) introduced the three strategic outcomes of improved journey times and connections; reduce emissions; and improve quality, accessibility and affordability. The NTS Delivery Plan ¹⁷ sets out the actions we are taking, within the context of the national performance framework, to support the purpose of this Government.

The Energy Saving Trust runs a number of relevant programmes for the Government, to engage individuals and organisations to reduce emissions and costs. Free Green Fleet Reviews, through the Trust, are available in Scotland to organisations with over 20 vehicles. The reviews provide advice to enable fleet manages to achieve carbon and cost savings. Advice on developing, implementing and monitoring Travel Plans is provided through on-line resource at www.chooseanotherway.com , free bespoke consultancy from the Energy Saving Trust as well as travel plan officers in each Regional Transport Partnerships.

Energy Saving Trust and the Energy Saving Scotland Advice Network promote eco-driving, to raise the carbon and cost saving benefits by more efficiently driving styles. An element of campaign is the development of the website www.ecodrivescotland.com . The site is being developed to provide links and advice on emissions from cars. Data on emissions from vans can be accessed from the Business Gateway website.

The Scottish Government is committed to facilitating the upgrading of the public sector bus fleet by 2020. The public sector bus fleet is predominantly minibuses. We believe it is possible for this fleet to entirely consist of LCVs by 2020. We are also developing proposals to change the Bus Service Operators Grant Scheme to encourage increased investment in lower emission and higher quality vehicles in the commercial sector.

The Scottish Government is also committed to reducing freight emissions, which are being tackled as part of wider package of measures through the Freight Best Practice Scotland ¹⁸. This programme, and the elements contained within it, include the development and publication of case studies demonstrating the advantages of EVs over diesel equivalents for city centres, as well as the use of technology in reducing the unladen weight and improving efficiency in rural areas.

2.3.4 Energy policy

In February this year, the Cabinet Secretary for Finance and Sustainable Growth announced a set of energy pledges. These pledges form a coherent approach to energy issues in Scotland, and will shape the policy agenda for the remainder of the current term of this Government. Pledges 8 and 9 specifically relate to transport:

• We will develop and deliver more sustainable transport to improve efficiency and reduce transport emissions in the longer term; and
• We will promote the development, uptake and use of electric and other low carbon vehicles, in addition to using improvements in vehicle engineering which are already available.

The Scottish Government's Economic Strategy also highlights the importance of renewable energy to our commitments to reducing carbon emissions and promoting growth. Our natural resources, research base and wider energy strengths provide us opportunities to:

• provide reliable, locally produced sustainable sources of energy;
• generate greater and more widely shared employment;
• create more highly skilled and better paid jobs;
• foster a self-sustaining and ambitious climate of entrepreneurial advance;
• encourage economic activity and investment across Scotland, thereby sharing the benefits of growth;
• bring a culture of confidence and personal empowerment to Scotland; and
• secure a high quality environment today and a sustainable legacy for future generations.

All of the above apply to the increased development and uptake of LCVs. The Renewables Action Plan ( RAP) will be published this summer and will focus on measures to meet the renewable electricity and heat targets for 2020 under the RED. The RAP will include routemaps for sectoral development to 2020, and the hydrogen and fuel cells routemap will contribute to the promotion of LCVs and infrastructure.

In addition, the seventh of the Government's ten energy pledges commits it to: implement measures to improve Scotland's energy use through the Energy Efficiency Action Plan, which is a key part of the Scottish Government's Climate Change Bill. The Energy Efficiency Action Plan is currently being developed and will be one of the key mechanisms for articulating the action being taken across Government. It will be aimed at reducing energy demand, cutting carbon emissions and contributing to sustainable economic growth through energy efficiency and productivity measures. There are clear links to fuel efficiency and the low carbon agenda in transport, and these will be made clear in the Plan, which will be published at the end of 2009, following consultation with stakeholders.

There are wider linkages being developed between energy and transport policy in order to meet Climate Change targets, including a recognition that the decarbonisation of the electricity grid will be a prerequisite for green EVs.

The Scottish Government is also supporting research and development in hydrogen fuel cells. Our Hydrogen & Fuel Cells Support Scheme provided a total of £1 million between seven projects, seeking to deploy and demonstrate renewable hydrogen and fuel cell technology. This included a £250,000 grant for the Western Isles Council H2 SEED project to install an electrolyser in the Creed Waste Management facility to produce hydrogen from biogas. When completed, this will be used to power the facility and several hydrogen vehicles on the Isle of Lewis.

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