Comparing Electric Mobility Policy between the UK and Germany

Comparing Electric Mobility Policy between the UK and Germany

Introduction

Great attention is being paid to the predicament of climate change and the reduction of atmospheric greenhouse gas emissions. The global climate change is attributed to carbon dioxide emissions in the environment from road transportation guzzling fossil fuels (Brooks and Gage, 2001). Europe’s transportation is one of the main contributors to global air pollution. The total consumption of energy has almost doubled up in recent times compared to the 1970s, subsequently doubling the carbon dioxide emissions that are environmentally unfriendly.  Approximately 8% of people living in urban areas in Europe are exposed to harmful levels of Nitrogen oxide gas emanating from road transport (United Nations Framework Convention on Climate Change, 2015). A transformation is, therefore, is needed for electric vehicle mobility.

Electrifying passenger vehicles is considered a prudent step to curb the gaseous emissions that pose a danger to the global climate. Studies illuminate that about 60% of green gas emissions can be saved in Europe if there will be a complete switch to electric cars. Car manufacturers are broadening their efforts to increase the scale of the manufacturing of electric cars in European nations.  Automakers are also expanding the electric model ranges to satisfy the increasing demand.  Many governments have intensified actions in a bid to shift to complete electric vehicles use. Among these actions is the offering of incentives, including purchase subsidies to encourage the use of electric cars.

Similarly, governments have taken an imperative role in the funding of charging stations. Europe’s agenda on mobility supports the transition to zero-emission vehicles with setting environmental goals to be attained by 2050. Countries in the European Union have also set targets for their electric vehicle fleet to rally behind the zero-emission agenda. The electric vehicle sales in the European countries have been increasing steadily. Sales reached more than 90,000 in 2014 from hundreds of sales in 2010 (Gnann et al., 2015). The purchases are estimated to go higher in 2020.

This paper seeks to do a comparative policy analysis among different countries in Europe and narrows down to the reduction of greenhouse gasses in the atmosphere. An assessment of electric vehicle policy goals and the approaches on the transition from the use of fossil fuel to the battery, hybrid plug-in, and electric vehicle use in road transportation is made. Hence, environmental and energy policies are extensively similar in European countries (Horne et al. 2005). Policies focusing on the electrification of road transport have, however, taken different forms in various European countries. The United Kingdom and Germany are the selected case studies of this study on the zero-emission agenda in Europe. This paper looks at programs and measures put in place by the UK and German government towards the shift to electric mobility to achieve policy goals. The two countries are bound by similar European Union environmental and energy policy targets that provide a context for the electric vehicle policies. The focus of this paper dwells in determining the similarities of the drivers towards the transition, and the implementation of electric vehicle policy between the two countries.

Literature Review

The United Kingdom and Germany are chosen as case studies due to their similarities in economic development. The two nations have the largest GDP’s in Europe, with Germany leading at about $4.0 trillion and UK second having a GDP of around $2.8 trillion (Gnann et al., 2015). This shows the sustainability of both nations in terms of the transition to wider rangers of electric vehicles. The two nations are functional case studies since there is an availability of high-quality data. A good picture of the two countries is outlined in this paper regarding the statistics on electric mobility.

According to IEA, 2019, the UK is among the leading automobile market in Europe, with 29.5 million cars in 2012, of which most are conventional combustion vehicles. They contribute to 12.6% of the total carbon dioxide emissions in the country. In 2014, only 1262 cars were electric in the United Kingdom. Germany had 43 million cars in the same year, with 451 cars being fully electronic. The fuel consuming cars contributed 14% towards carbon dioxide discharges of the overall national energy-related emissions.  The automobile sector is vital to Germany’s economy as it generates roughly €426 annually. Analysis of previous research work shows that significant brands of manufacturers such as Audi, BMW, and Volkswagen, among others, employ more than 5 million people. The UK also has a steady output of vehicles with brands such as Toyota, Nissan Land Rover, and Jaguar among the leading brands. However, most of the cars are supplied by foreign brands. Plug-in car sales in the UK rose to over 59,000 in 2018, while Germany had a total of 196,000 sales (IEA, 2019). The automobile industry is deemed more significant in Germany than in the UK (Handelsblatt, 2012).  Studies indicate that the transition towards electric mobility could affect industrial dimensions more in Germany than in the UK. In 2008,

The UK obligated itself to the Energy and Climate Policy and subsequently setting carbon dioxide targets to less than 20% by 2020 (Elzen and Wieczorek, 2005, p. 651). By so doing, road transportation is one of the sectors contributing to the emissions is to be electrified to achieve the target. A target reducing greenhouse gas emission by 80% before 2050 has been legislated in the DECC Climate Change Act 2008. The governments are aiming to arrive at close to zero greenhouse gas emissions before 2050. From 2040 onwards, cars sold in the United Kingdom will have zero emissions. The UK government has distinctively demonstrated that the reduction of carbon dioxide emissions is a significant focus on the electric mobility policy (Elzen & Wieczorek, 2005,p 651). The environmental impact of the transport sector is to be reduced by the whole sector going electric (Automotive Council UK, 2020). Low carbon vehicles also have the potential to spur industrial development in the UK.

According to a publication by Technology Strategy Board, 2012, National Electric Mobility Strategy was launched in 2008 by the German Government. Targets and drivers were announced in the strategic plan. The government set targets of not less than 1 million electric vehicles by 2020 and 6 million by 2030 (Manager magazin, 2010). The main focus of the report is to preserve German’s automotive sector’s role in the world. The sector generates an estimated 317 billion euros annual turnover and creates over 5 million jobs (IA-HEV, 2015). Environmental goals are also enlisted in the plan. An intention to have a 20% reduction of greenhouse gas emissions by 2020 and 80 to 95% by 2050 (WEC, 2011). Incentives offered to sustain the transition to electric cars are categorized into fiscal and non-fiscal groups. According to Kempton and Tomic, 2005, a regulation passed by the European Union regarding regulatory incentives defined a standard carbon dioxide emission. The standard emission of 95g Carbon dioxide per kilometer by 2021 applies to light commercial vehicles and passenger cars (Green Car Congress, 2011).

From the literature review, most authors and publications have dug into the goals set out by the two countries in achieving electric mobility. The reduction of greenhouse emission is at the epicenter of the plans to shift to an all-electric road transport sector. However, the emphasis has not been put on the rate and cost of production—a limitation of the previous studies. Electric vehicles come with sophisticated machines, and therefore the cost of production is high on the manufacturer’s side. This challenge is seen to be a derailing the transitioning to electric mobility.

Case Overview

This section discusses the explanatory variables on which the car mobility agenda depends. Policy measures used by both countries towards the agenda are outlined. The graph below indicates a gradual transition from conventional fuel combustion vehicles to electric mobility. There were about 1,000 fully electric car registration in 2011 to over 15,000 in 2018.

Graph 1: Graph illustrating a history of electric vehicle series in the United Kingdom from 2011 to December 2018.

Source: Society of Motor Manufacturers and Traders (SMMT).

In the case of Germany, there has also been a steady increase in the registrations of electric vehicles from 2010 to 2018. The graph below indicates growth.

Graph 2:  Illustrating car registrations between 2010 and 2018 in Germany.

Source: Monatliche Neuzulassungen

Policy Measures by Germany

Direct consumer incentives provided by the government saw the electric cars registered before the year 2016 were excluded for 10 years from the mandatory ownership tax (Federal Ministry of Transport, Building and Urban Development, 2011). This is a fiscal incentive since it affects the GDP directly.  Plug-in cars registered from 2016 to 2020 have been excluded from the tax for 5 years. Exclusion from emission inspection is another direct consumer incentive provided by the German government (Green Car Congress, 2011). This exemption deflates the costs of inspection by about 20 euros. The government of Germany also provides low-interest loans to companies purchasing electric vehicles with less than 50g/km carbon dioxide emissions. The loan interest rates are less than 1 percent and amount to the whole price (Mayer et al., 2019). Municipalities grant special privileges to low emission automobiles. These privileges include free parking, access to some restricted traffic zones, and access to lanes meant for High occupancy vehicles (Technology Strategy Board, 2012).

Programs are being put in place to complement the electric mobility policy. One of the initiatives is the Electromobility Model Regions (Federal Ministry for the Environment, 2014, np). The initiative funds almost 100 projects with a focus on making electric mobility worthy of daily use. Between 2011 and 2014, these projects were supported by a combined government and industry funding of about 140 million euros. Another complementary policy program is the Electric Mobility Showcase Regions (Manager magazin, 2010). The program investigates societal and technical barriers to the consumption of electric mobility (Mayer et al. 2019, p.44).

Policy Measures in the UK

The United Kingdom laid down a strategic plan named Driving the Future Today — A strategy for ultra-low emission vehicles in the UK. The plan contains measures to incentivize the consumption of electric vehicles, support technology innovation for electric vehicles, and invest in the charging infrastructure. The target of the strategic plan was to have electric vehicles accounting for at least 5% of the total car authorizations by 2020 (Office for Low Emission Vehicles, 2013a). Ownership taxes are deflated for cars with low emissions (Department for Transport 2020). A plug-in car grant was introduced in 2011 by the government. The subsidy covered up to 5,000 pounds or 25% of the price of electric cars at the time of purchase.

Table1: Shows tax payment on registration. Source: UK Government. Vehicle Tax Rates

The table above shows the rates of the first tax payable when registering a car in the United Kingdom. The low carbon dioxide emissions of less than 50g / km are excluded from taxes. The government has heightened the charging infrastructure through the Electric Vehicle Homecharge Scheme, which was introduced in 2014 to provide subsidy to the installation of chargers privately in the UK.  The subsidy covered 75% of the overall installation costs. Between 2015 and 2020, 32 million pounds were set aside to develop the charging infrastructure (Department for Transport, 2020). To complement the electric vehicle policy, the Go Ultra Low City Scheme was launched to provide 40 million pounds to four cities to be invested in incentives towards Electric Vehicles (IEA, 2019, np). According to Automotive Council UK (2020), the United Kingdom government set up the office of Low Emission Vehicles to provide co-ordination and leadership on electric mobility-related activities.

Discussion

UK and Germany are amongst the most significant car markets in Europe. It is shown that for both countries, policymakers set goals to achieve environmental and industrial targets. The UK has seen a constant rise in car registrations, which explains its efforts to electric mobility policy. The United Kingdom provides direct financial incentives for the promotion of the uptake of electric automobiles. Growth in registrations of battery electric vehicles, hybrid electric cars, and plug-in hybrid electric cars has been witnessed in early recent years. Taxes have been reduced on company cars having low levels of carbon dioxide emissions. Cars with less than certain limits of carbon dioxide emission rates have been exempted, and their taxes reduced significantly. These actions promote the purchase and use of electric automobiles in the UK. Similarly, complementary programs such as Go Ultra Low City Scheme and Electric Vehicle Homecharge Scheme are vital in the uptake of electric vehicles.

In Germany, municipalities offer special privileges granted by municipalities to low emission automobiles promote the uptake of electric vehicles. These incentives have played an imperative role as the increase in plug-in car registrations has been witnessed. Complementary programs such as Electromobility Model Regions and Electric Mobility Showcase Regions provide funding and emphasize research on the electric mobility activities. Funding programs in the UK and Germany have contributed immensely to electric mobility development. In both countries, private-public partnerships are being witnessed in financing the charging infrastructure. Well-equipped infrastructure to provide charging services is critical towards meeting both governments’ agenda towards electric mobility hence reduction in air pollution.

This study notes that the adoption process of the plug-in electric cars is still long since the infrastructure entailing the charging stations is not sufficient. Transportation is a significant activity in Europe, and there is continuous growth in the mobility sector. It is forecasted there will be an increase of about 42 % of passenger transport and 60 freight transport before 2050, which is attributed to electric mobility.

                      Transitioning to Electric Mobility in

the UK

A clear pathway has to be sought towards the electric mobility policy to provide a link between the present state and the future. There will be an essential need to adapt to changes in vehicle technology, production system, and the charging infrastructure. These changes are not envisioned to cause a replacement of the entire existing suppliers. However, the United Kingdom government favors the empowerment and development of local suppliers to deliver on electric automotive technologies. The vehicles with over 255 g/ km carbon dioxide emission rates are heavily taxed to promote a shift towards electric mobility. The policymakers are therefore set to use existing manufacturers like Jaguar Land Rover and upcoming ones that focus on the transition to electric mobility.

                      Transitioning to Electric Mobility in Germany       

Just like the United Kingdom, a change in-vehicle technology, production system, and charging infrastructure is geared to the electric mobility era. Linking the current state and the future, the government is in full support of the existing automotive industry that is stable and dominating in Europe. The changes foreseen are not inclusive of the replacement of the existing system and structures. Established manufacturers such as Audi, BMW, and Daimler, among others, are seen to be at the forefront in putting measures to embrace the electric mobility policy.  A transformation pathway has to be used by both the government and the private sector to reach both industrial and environmental goals (International Council for Clean Transportation, 2015). The role of the existing car industry in Germany, therefore, influences the current and future state of electric mobility in German.

It is valid to state that the approaches to the transition to Electric vehicles are similar in both the UK and Germany. Despite a steady rise in purchases of electric cars, the regime is still dominated by the internal fuel combustion vehicles. Heightened focus on the electric mobility policy is necessary for both nations.  A campaign on the reduction of greenhouse gas emissions is the main drive towards electric mobility. On the flip side, electric cars are not entirely free of environmental pollution. There are small amounts of emissions during their production and the end life of the vehicles.   However, studies have suggested they contribute to lower emissions compared to internal combustion vehicles.

Conclusions

This study has pointed out the comparative policy approach to electric mobility between the United Kingdom and Germany. Policy goals between the two countries and the incentives approach are analyzed. The pathway to transitioning from the combustion fuel cars to electric vehicles concerning the electric mobility policy is outlined for both countries.

A review of policy goals towards the achievement of electric mobility is made. A reduction in the greenhouse gas emission and the preservation of the automotive sector, respectively, are the environment and industry-related goals. The economy of Germany is highly dependent on the car manufacturing industry. Therefore, the government has to enhance electric mobility technology for the foreseen export market. The emission reduction goals by 2050 are the main drivers of the electric mobility agenda in the UK. Similarly, the German government announced targets towards the reduction of gas emissions in line with the European Union agenda.

A similarity in the pathway to the transitioning from the combustion fuel cars to electric vehicles is observed in both nations. Both governments are keen on preserving the local and existing automotive manufacturers as well as creating an environment for a new industry. Both governments have put in place measures to enhance the electric mobility policy. The United Kingdom introduced a purchase grant while the German government focuses its funding on technology development towards electric mobility.

Direct consumer and indirect consumer incentives have been discussed to be among the drivers of the uptake of electric cars. Reduction of ownership and registration taxes are among the direct consumer incentives offered by the UK government. In Germany, the electric vehicles registered before 2016 were excluded from the mandatory ownership taxes for 10 years. A direct consumer incentive also allowed for the exemption from emission inspection for electric cars in German. Municipalities offer special privileges such as free parking to vehicles that do not have high emission levels. This is an indirect consumer incentive geared to electric mobility adoption.

An important prerequisite to the electric mobility policy achievement is the availability of charging stations and technology. Both the German government and the UK government are partnering with the private sector in funding the charging infrastructure. The Homecharging Scheme by the UK government launched in 2014 subsidizes the costs of installing electric motor chargers privately. The approach to developing the infrastructure by the two countries steers electric mobility hence a steady move to achieving policy goals by both governments.

Programs have also been put in place by the UK and German governments to complement the electric mobility policy. The Go Ultra City scheme is aimed to fund cities towards the electric vehicles agenda in the UK. The UK government also created an office of low combustion vehicles under the ministry of transport. The office monitors projects geared to develop electric vehicles that are emitting low levels of greenhouse gas. Electromobility Model and Showcase regions are among the complementary programs set by the German government. Challenges in planning failures and the competition among manufacturers are set to be a backlog towards the goals.

To summarize, it seen that both countries are committed to the electric mobility policy. There is a share of similarities and differences between the two countries on measures put aside in achieving the respective policy goals. Funding, regulatory, and incentive strategies are the main focus of both countries to drive the electric mobility agenda.

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