Government rescues the environment by subsidising diesel electric cars

The electric car boom was alive and well in Britain last October. The Telegraph reports a 6.9% increase in the registration of electric cars means, “one in 10 new cars sold in Britain is electric”.

Which sounds good. But the caveats come hard and fast, well below the headline. “Electric”, in this case, means “either battery powered or a hybrid”. And hybrids include cars which just “regenerate energy from braking that is used to help power the car”.

Only 2.2% of cars registered were actually battery powered…

The token industry expert in the Telegraph article is mighty careful to get his wording right:

Mike Hawes, chief executive of the Society of Motor Manufacturers & Traders (SMMT), said: “The growth in alternatively fuelled vehicles is very welcome, showing increasing buyer appetite for these new technologies.”

“Electric” and “battery” become “alternatives” and “new technologies”. Find out why he’s being shifty here.

The government is, as ever, undeterred by mere numbers. The chancellor, according to the BBC, has “introduced a new system of car tax aimed at protecting the environment.”

His plan is “a sliding scale for car tax or vehicle excise duty (VED), to make it cheaper for cars with lower emissions of carbon dioxide (CO2).”

Electric car buyers, e-believers and climate warriors will be delighted to discover the chancellor is behind them. Except of course, I’m misleading you.

The incentives I just described were Gordon Brown’s support for diesel in 2001. Because diesel cars are more fuel efficient and thereby pollute less, right?

As the BBC summarises, “Millions of Britons switched to drive very polluting vehicles, while being told it was less damaging to the environment.”

Unfortunately, the data was dodgy and the BBC points out the resulting boom in diesel cars “has been associated with thousands of premature deaths a year.”

Oops. Who would’ve thought combating climate change would cost so much?

Perhaps the 11,000 scientists currently in the news for advocating various forms of population control, including “reducing” the population, should promote diesel as the solution to climate change?

While electric cars hit record numbers at 2.2% of sales, the remnants of the last government attempt to protect the environment remain on the road, killing people in subtle ways. If you believe those figures, that is…

But the number of diesel vehicles is falling rapidly. And this time the numbers are actually meaningfully large, reports the BBC:

“SMMT figures also highlighted the continued demise of diesel, which had just 24pc of the market – down from more than half before the VW “dieselgate” scandal broke in 2015.”

Sounds like cleaning up the fallout of the government’s last attempt at protecting the environment has a bigger effect than its latest project of subsidising electric vehicles. Saving the environment by reversing government attempts to save the environment actually works.

But here’s the really interesting bit. Even when the government knows it is doing the wrong thing, it fails to stop doing it. Because of the interest groups it created.

According to a BBC freedom of information (FOI) request, the Labour government was well aware of the damage its so-called “dash for diesel” was doing. But it only marginally changed incentives for fear of going from subsidising to punishing diesel too quickly. Subsidising bad behaviour is tough to reverse because subsidised people vote.

Campaigners and politicians have jumped on the FOI admissions. The BBC reports:

Paul Morozzo, clean air campaigner at Greenpeace, said: “It’s now clear politicians have known diesel is toxic to people’s health for decades. This government must not make the mistakes of the last. It must prioritise public health over the motoring lobby in next week’s budget by getting tough on diesel.”

Not making the mistakes of the past is a good idea. But it was the climate change lobby which pushed for diesel support in the first place. Because of its low CO2…

And so the government may actually be making the very same mistake instead:

The Environment Secretary Michael Gove said: “The dash for diesel was pursued under a Labour government, and these documents show they knew the damage this would do to our environment. This is yet another example of a Conservative government having to clean up Labour’s mess.

“We are taking action and have put in place a £3bn plan to improve air quality and reduce harmful emissions as well as ending the sale of new diesel and petrol cars and vans by 2040.”

Replacing the dash for diesel with the dash for electric cars is going to go dreadfully wrong. Perhaps it’ll be the chemicals used in batteries. Or the difficulty of dealing with all those used batteries. Or having to mine sufficient resources.

Who knows what they’ll get wrong this time?

Until next time,

Nick Hubble
Editor, Southbank Investment Research

Category: Energy

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