- Electric vehicles and hybrids only cars sold post 2030, with hybrids banned from 2035
- Government funding electric vehicle and renewables manufacturing but far more investment needed from private sector
You won’t be able to buy a fully combustion-engined car in the UK by the end of the decade, the government has announced. This has been signposted for some time, but the Johnson government has now confirmed any vehicle with tailpipe carbon emissions capable of moving “a significant distance” cannot be sold after 2030, while hybrid sales will also be banned from 2035.
This move comes alongside a well-trailed plan to massively boost the UK’s offshore wind generation and an investment in hydrogen technology. The government will put up to £500m into building a “hydrogen neighbourhood” where hydrogen will be used for heating and cooking, with a total of 5 gigawatts in low-carbon hydrogen capacity the goal by 2030.
Writing in the Financial Times, the prime minister Boris Johnson said up to £500m would be used to develop local battery manufacturing, with a focus on the Midlands, alongside new spending on nuclear power and carbon capture and storage.
Challenges involve building sufficient charging infrastructure and developing local manufacturing capacity. Currently most electric vehicle (EV) batteries are made in China, which is also the leader in processing the raw materials like lithium needed to make them.
Currently, the material is sourced much more cheaply from Chile and Australia, with just a handful of lithium projects in the planning stages in Europe.
There are already signs UK industry is tilting towards EVs. Halfords (HFD) announced on Wednesday it would have at least one EV specialist in each of its garages by April.
The Society of Motor Manufacturers and Traders chief executive (SMMT) said consumers would still need reassurance that getting around by car will not become more difficult.
“Success will depend on reassuring consumers that they can afford these new technologies, that they will deliver their mobility needs and, critically, that they can recharge as easily as they refuel,” the group said.
Ian Simm, chief executive of sustainability-focused active fund house Impax Asset Management (IPX), said more detail was needed, especially as the government will need billions more in private investment to reach its goals. “The UK’s leadership in setting a net-zero target still needs to be underpinned by a set of clear and credible sectoral roadmaps setting out the changes which need to be made across the economy in order to deliver the Prime Minister’s bold vision,” he said.
These post-internal combustion engine (ICE) technologies are quickly evolving, either through new battery chemistries such as those announced by Tesla in September. A possible shift to hydrogen fuel is also a possibility has been floated more as a better option for heavy transport, rather than act as a straight competitor with EV-powered cars.
The World Platinum Investment Council’s director of research, Trevor Raymond, believes hydrogen will become more and more relevant in the low-carbon space.
“The debate around can you ban internal combustion engines by 2030, the answer is no you can't,” he said. ”If you make green hydrogen, you can de-carbonise, you can get the world to be less reliant on fossil fuels by using green hydrogen.”
Mr Raymond said passenger hydrogen cars were around a decade away, but heavy vehicles could come in much faster. The platinum lobby is focused on hydrogen given the use of the precious metal in fuel cells, while platinum and similar metal palladium are also used in hybrids and ICE cars.
We'll be looking for further insight on how traditional auto suppliers will fare in this transition when Johnson Matthey (JMAT) reports interim results later this week. The FTSE 100 firm, a catalytic converter manufacturer and platinum group metal specialist, has previously said it is "strongly positioned to benefit" from growth in hydrogen fuels in the coming decades.
Hydrogen electrolyser maker ITM Power's (ITM) shares were up 6 per cent after the government announcement, and is trading at over four times its opening price for 2020 as the focus on hydrogen has intensified this year.
The European Union has also committed to spend hundreds of billions of euros as part of a green Covid-19 recovery, backing new renewables installation and manufacturing.
