Address at the LowCVP conference regarding green usage and investment.
Thank you for inviting me to speak at this important event.
It may be helpful if I indicate that this government has 2 clear priorities. Sorting out Britain’s financial problems, and developing a greener, low carbon economy. These priorities are complementary, not contradictory.
Transport has a crucial role to play in achieving these goals. Indeed, Transport Secretary Philip Hammond has said that his twin aims are to ensure that the transport sector contributes to economic growth and to the achievement of our carbon reduction targets.
In respect of the economic challenge we face, we are taking urgent and immediate action to deal with the debt crisis. It is vital we have a strong and stable economy to support the transition to a greener low carbon economy in future.
We have already announced some spending cuts - with the DfT contributing £683 million this year - and now the focus is on autumn’s Spending Review.
Of course this is going to require some tough and difficult decisions. We have to cut waste, prioritise the most important schemes, and deliver better value for every pound of public expenditure.
We will also reform the way that transport projects are appraised in England - so that schemes offering the best carbon efficiency and value for money are fully recognised. The revised system will be launched after the Spending Review.
Only after the Spending Review can we identify which major transport programmes we will be able to support, and provide precise details about funding for the immediate future.
But let me be clear. Cutting our spending doesn’t have to be incompatible with a low carbon agenda. Some low carbon choices already offer outstanding value for money - and our future goal is a market for green vehicles that makes economic as well as environmental sense.
Green jobs and green investment are essential for our economic recovery. This makes hard economic sense.
Let me now give you a quick overview of some of the ways in which the new government is approaching the low carbon transport agenda.
The car is key. While rail is important, the vast majority of journeys are, and will continue to be, made by car; progress must be made on road vehicles in order to reduce carbon. The enemy is not the car, but the carbon.
So, a key part of any strategy to reduce transport’s emissions is making sure that the cars we drive are as clean and fuel-efficient as possible.
In the longer term, electric vehicles are increasingly likely to provide a clean, low carbon alternative, with air quality as well as climate change benefits.
But in the short term, the majority of CO2 savings from road transport will come from improvements to conventional technologies, driven mostly by EU regulations on fuel efficiency. We can’t just sit back and wait for electric vehicles to ride to the rescue tomorrow: we have to make sure we’re squeezing more fuel efficiency out of petrol and diesel cars today.
And we mustn’t forget vans either. They are vital to our low carbon vehicle programme, and we are considering this aspect. We will shortly be publishing a reply to the very informative responses received during the recent consultation on the draft van CO2 regulation.
But what about the longer-term future?
No-one knows, of course, which technology will dominate - but there are already electric and plug-in hybrid vehicles (EVs and PHEVs) which are close to market.
I am well aware of the views of many influential stakeholders on the need for government support to kick-start the plug-in car market. We have listened very carefully to what the car manufactures, the Climate Change Committee, environmental groups and others have said on this, and I know that this is something that you will be discussing later today at your conference.
In the coalition agreement we said we will mandate a national recharging network as well as a smart grid and smart metering. We are carefully considering the options for delivering value for money, and an infrastructure that’s fit for purpose.
A recharging infrastructure is one thing. Getting people to buy the cars is another.
I know that many of you are impatient to hear how we might support purchases of low-carbon vehicles, including electric and plug-in hybrid vehicles.
This is something which we are currently considering very carefully as we review our departmental commitments. We understand the need to give some clarity and certainty here, and we will be making an announcement as soon as possible.
The low carbon transport agenda is not just about low carbon cars. I know that LowCVP has made a very useful contribution over the years to help develop a market for low carbon buses.
Over the past year, my department has welcomed the LowCVP’s support in helping to design and promote a framework of incentives for low carbon buses including the roll out of the Green Bus Fund.
And as the Minister for buses, this is an area I’m keen to support. Last week I announced £15 million funding for green buses which will see over 150 new low carbon vehicles joining fleets throughout England.
In addition to the £30 million for round one which we are currently paying out, this funding is intended to put low carbon buses within the reach of as many operators and local authorities as possible throughout England.
Bus operators and councils can bid for the money which they can then use towards the additional up-front cost of buying low carbon buses.
We want to support new transport technologies to help make our transport system greener and more sustainable. This investment will stimulate the market for low carbon buses by reducing some of the initial costs for operators and councils.
It will deliver significant benefits, in particular reducing the impact of road transport on climate change and improving air quality.
Low carbon buses use at least 30% less fuel and emit nearly a third less carbon than a conventional bus, yet they currently make up a tiny fraction of buses on the road.
This may partly be due to uncertainty about the operational performance of low carbon buses. This funding will help to address this information gap by requiring the winning bidders to share information with others in the industry.
Biofuels has been a very complex and controversial area in recent years. There is no doubt that they have an important part to play in the overall mix of measures to decarbonise transport. There has equally and rightly been much concern about the wider sustainability of biofuels: this is a debate I followed closely when I was in opposition.
It is abundantly clear to me that, while there are many good biofuels, such as used cooking oil, there are also many biofuels which deliver no environmental benefits whatsoever, particularly when indirect impacts are taken into account.
Given this, I believe that it is right that the government should take some additional time to review this subject carefully, to ensure that policy decisions going forward are robust and stable, especially in respect of the uncertainties of the Fuel Quality Directive and the Renewable Energy Directive, and how they will work together.
I have discussed these issues with stakeholders who have impressed on me their strong views - both about the benefits and also about other wider implications of biofuels use, such as concerns over indirect land use change. I’m sure you will agree that a policy of stop-start, on-off support for biofuels is in no-one’s interests: we all need a clear long-term direction - and that’s what we aim to provide.
Technology and cleaner fuels are important in reducing emissions, but they are not enough on their own. We also need to think about the choices we make, as individuals and businesses, about when, where and how we travel, and how we carry goods around the country.
As you know well, significant savings can be achieved simply through the type of vehicles we purchase or the way we use them. And I know LowCVP has provided a useful input into this area of work - particularly through the launch of the fuel economy labels for both new and used cars - something I welcome.
This can be a challenging area, and transport behaviours can be difficult to influence. I had a useful discussion with the Energy Saving Trust last week about some of these challenges. I was encouraged to hear that they are seeing some promising results from their work with individuals and business fleets. And of course, many of the actions in this area do make sense on both economic and environmental grounds.
Alternatives to travel
Of course the government has an important role to play here. Indeed, I am the first Transport Minister to say ‘don’t travel’!
We currently think of transport in terms of four different modes - road, rail, air, and water. I want us all to start recognising that ‘communication’ can be the 5th mode… and that communications technology can provide an alternative to travel in the first place.
So I’m looking into ideas and measures that enable people to do business without having to leave their homes or offices, for instance through the use of broadband-enabled technologies.
I was pleased to read in the Daily Telegraph on Saturday that my new remit - developing alternatives to travel - was welcomed by the CBI and the Campaign for Better Transport.
There is a common theme here - cutting carbon, creating jobs.
Supporting business, deregulation
Again, the challenge for government and the low carbon industry is to deliver carbon savings in a way which also creates jobs and economic benefits.
We are committed to supporting the development of a world class low carbon vehicle industry in Britain. The shift to lower carbon vehicles will create a new production and business model, and provide the opportunity for a reinvigorated UK automotive sector, supporting a rebalancing of the economy towards high tech jobs.
I am very impressed with progress made by the motor industry in this country towards greener vehicles - from major manufacturers, to scores of specialist high-tech suppliers and engineering companies. The move to ultra-low carbon vehicles is creating diverse business opportunities in the automotive supply chain and associated energy storage and infrastructure sectors.
Renault/Nissan’s decision to manufacture the Leaf electric car in Sunderland, as well as to locate its European battery plant at the Sunderland plant is very welcome. One of the first decisions of the new Government was to re-confirm £20 million towards this valuable project. We also welcome Toyota’s investment to build the new hybrid Auris in Burnaston. Both are strong endorsements of the UK as a manufacturing base for the next generation of cars.
And smaller, highly innovative companies - like Allied in Scotland, Modec in Coventry, Smiths in Tyne and Wear, and Ashwoods in Exeter - are showing what is possible in respect of electric and hybrid vans.
Part of our commitment to creating a business-friendly environment in the UK involves cutting costs - and reducing the regulatory burden.
The coalition agreement makes it clear that we want to turn old thinking on its head and develop new approaches to government. We want to avoid the bureaucratic levers of the past and find intelligent ways to encourage, support and enable people to make better choices for themselves.
And we are starting to do that.
On the 1st of July, Vince Cable chaired the first Reducing Regulation Cabinet Committee. This committee, along with a new ‘challenge group’, will help change the culture of government and find new ways of solving problems, reducing the red tape that can strangle enterprise.
This will help ensure that any new regulations are robustly justified, and that all other options have been considered before regulations are introduced.
We are also introducing a ‘One-In - One-Out’ regulatory management system, so that any new regulatory costs will be compensated by even greater cuts to the cost of old laws.
We need businesses to drive the growth our economy needs, not be tied up with form filling, and the government is determined to do all it can to make that happen.
Thank you for inviting me to speak at this important and timely event.
And let me take this opportunity to thank the motor industry - and the low carbon vehicle industry - for everything you have accomplished in recent years to get us to where we are today.
I sincerely believe that you are the modern day equivalent of some of the early motor industry pioneers who were responsible for revolutionising personal mobility in the late 19th and early 20th centuries.
What you are doing is of historic significance - and we are determined to support you so that the transport sector can play a central role in reducing carbon emissions.
It’s very early days - it’s less than nine weeks since I took up my post - but I look forward to working with you to meet our shared goals.
(This speech represented existing departmental policy but the words may not have been the same as those used by the Minister.)