Background
As part of its net zero strategy, the Government is consulting on how to intervene in the market to deliver a transition to zero emissions (ZE) HGV’s. Whilst much of the consultation is aimed at truck manufacturers, this is important for members and your supply chains in the type of vehicles on the market and potentially on your own or your logistics provider’s decision on which trucks to buy, so is worth a quick read.
HGV’s emissions are a significant part of the overall emissions from transport, and members will be aware they are a key part of our climate action roadmap with an ambition to reach net zero retail transport by 2035.
The previous Government set a target to end the sales of non ZE HGV’s up to 26T by 2035 and all other HGVs by 2040. These new proposals consider how the Government can speed up the supply and take up of HGVs to meet those targets. The Government recognises there are challenges to reach ZE HGVs, both in supply of appropriate vehicles and support to operate them and is seeking views on the way forward.
Below is a very short summary of the consultation, you can read it in full here . We are not experts in logistics and will not be making a detailed response, however, we would be interested in comments on the proposals particularly the final one which place a requirement on large fleet operators to have a proportion of ZE vehicles. We will also continue to push for confirmation the required electricity supplies would be in place to support increased use of ZE HGVs.
Current Market
About 41,000 HGVs are bought every year in the UK, about half up to 26T and half above. Sales of ZE HGV’s in 2024 were 0.6% of the market. The Government believes this will increase as the range of battery driven HGV’s improves and the cost falls closer to diesel vehicles. They also point to the growth of the ZE market in other countries. However, they accept current market growth will be insufficient to make the progress required, hence the proposed intervention.
The current regulations aimed at reducing emissions , require HGV manufacturers to reduce CO2 emissions from new vehicles; a 15% reduction by 2025 and 30% by 2030 relative to 2019.
Proposed Regulations
The consultation concludes doing nothing, in terms of changing regulations, is not an option. The current trajectory of sales will not deliver the market for new ZE vehicles not will it stimulate investment in the infrastructure to support them.
The first proposal would increase the reduction in emissions for new vehicles over a trajectory to 100% reduction. The EU has taken this approach, increasing the reduction of 90% by 2040 on a 2019 baseline. Whilst the Government sees the advantage of building on existing regulation and mirroring the EU approach it feels this will also mean manufacturers are as interested in reducing emissions as bringing forward new ZE vehicles. A slower transition to ZE vehicles may also deter investment in infrastructure.
The second proposal would mandate manufacturers to offer an increasing proportion of ZE vehicles as part of their sales. There could be some flexibility between manufacturers to allow them to trade to meet targets and penalties for those who do not comply. The concern is the market will still not grow quickly enough and buyers will continue to demand conventional vehicles. Also there are concerns of how the scheme would work as demand varies from year to year, being able to confirm and predict the volume of required ZE HGVs. This uncertainty could also lead to unwillingness to invest in future infrastructure
The final proposal is the one which could directly impact retailers. It would require businesses which operate large fleets of HGVs to have an increasing proportion of ZE vehicles; within that it suggests operators using HGVs in urban areas would be a priority. There would be allowances should insufficient vehicles be available. They believe this would send a positive signal to manufacturers, in terms of market growth and from that, encourage investment in infrastructure. It could also work alongside increased requirements on CO2 emissions reductions. On the negative side, it acknowledges it would require some businesses to invest more in both more expensive vehicles and infrastructure to support them, affecting growth and competition. It is also uncertain whether there would be adequate supply of ZE vehicles to meet demand.
Other Factors
Although the consultation refers to concern around investment in infrastructure, including grants currently available for fleet operators, there is no details of how HGV operators will be able to support HGVs. Improving electricity supplies is a major problem in decarbonisation, particularly to service large fleets of ZE vehicles and it is still not clear when this will be in place.
Next Steps and BRC Action
The Government is interested in comments on all the proposals; increased emissions reductions, mandates on manufacturers and mandates of large fleet operators; by the middle of March. It will consider these before returning with regulatory proposals. If required we will respond but we will definitely continue to make the point about the need to ensure electricity infrastructure is in place to support these changes.
We are also liaising with specialist organisations such as Logistics UK of which many of you are members to support their detailed submissions.
