Transport Decarbonisation to Save UK Homes £22bn

Decarbonising UK transport has the potential to unlock massive savings for households across the country. A recent analysis conducted by the Resolution Foundation, and funded by the European Climate Foundation, reveals that by 2035, UK households could collectively save a staggering £22 billion. This groundbreaking report, titled ‘Getting the Green Light’, sheds light on the substantial financial benefits that come with transitioning to a greener and more sustainable transport system.

According to the Committee on Climate Change (CCC), 60% of the savings associated with the overall net zero transition can be attributed to more affordable transport options. The report emphasises that if this transition is executed effectively, households could witness an average annual saving of £650 by the mid-2030s. These savings can add up significantly, culminating in the impressive £22 billion figure.

The electrification of road travel emerges as a key component of this cost-saving transition. The report highlights that the majority of potential savings lie in the adoption of electric vehicles (EVs). Furthermore, it commends initiatives such as the Zero Emission Vehicle (ZEV) mandate for accelerating the introduction of EVs into the market. In addition, the report advocates for the implementation of salary sacrifice schemes and other incentives to facilitate a smooth transition towards greener transport options.

While acknowledging the benefits EV drivers stand to gain from lower electricity costs compared to petrol, the report also draws attention to existing challenges. Issues such as the disparity in pricing between public charging and home charging, as well as the discrepancy in VAT rates, pose hurdles to widespread EV adoption. One proposed solution is to establish public charging parity by reducing the VAT rate on public charging from 20% to 5%. Although this change may cost the Treasury around £700 million, it is deemed a necessary step towards promoting EV usage.

Looking towards the future, the report emphasises the need for policy interventions to address issues such as local monopolies on public chargers and price regulation. These measures are crucial in ensuring a fair and equitable transition to a decarbonised transport system that benefits all members of society.

Jonathan Marshall, Principal Economist at the Resolution Foundation, underscored the significance of decarbonising travel in the UK:

“If the UK is to achieve its net zero target by 2050, we must accelerate the decarbonisation of travel. Transport accounts for a substantial portion of our carbon emissions, making it a critical area for intervention. The potential financial rewards of transitioning to greener transport solutions are immense, with over £20 billion in annual savings projected by the mid-2030s.”

“The shift to electric vehicles has the potential to reduce costs for motorists. However, there is a concern that without targeted policy changes, these savings may predominantly benefit wealthier households. By implementing universally affordable charging infrastructure for EVs, offering discounts for public transport, and introducing comprehensive carbon pricing measures, we can ensure a fair and inclusive transition towards sustainable transport options.”

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