Investor and consumer-focused solutions are in development and will be launched next year.
The UK needs to unlock an additional £150 billion in public and private finance to phase-out road vehicles with internal combustion engines (ICE) by 2030, according to the Coalition for the Decarbonisation of Road Transport’s (CDRT) inaugural report. The report was published in time for Transport Day at COP26.
Drafted by the Green Finance Institute, the CDRT report identifies barriers to investment in the road transport sector’s transition to net zero greenhouse gas (GHG) emissions and outlines 18 solutions for mobilising public and private finance. Some of these solutions are already in development and will be launched next year, the CDRT said.
UK adoption has increased recently, with one in seven new cars registered in October being an electric vehicle (EV), according to the report. However, the pace of change is not fast enough. A report published by NGO ShareAction earlier this year warned that all new cars sold around the world need to be fully electric by 2035 in order to ensure net zero by 2050.
“To accelerate the redirection of private capital into road transport decarbonisation opportunities and achieve net-zero targets set by government, collaboration between public and private sector needs to happen to a greater extent. This needs to be supported by regulation and a clear direction of policy to give investors confidence,” the report noted.
First launched in May, the coalition now consists of over 200 experts spanning more than 40 organisations, including Lloyds Banking Group, Octopus Electric Vehicles and the Global Infrastructure Investor Alliance.
The solutions outlined by the CDRT aim to both support and encourage consumers to purchase an electric vehicle and encourage investors to funnel capital into the market.
To better support consumer purchase and leasing of EVs, the coalition has suggested that the government increases loan capacity in the market through the securitisation of used EV loans in order to allow aggregation and sale on secondary markets.
To accelerate the development of UK-wide charging infrastructure, CDRT solutions include developing a transport infrastructure facility that will use public and private finance to de-risk investments where there are market failures in the short term.
Further, the CDRT has suggested that an interactive knowledge hub could help connect businesses seeking investment with investors looking for opportunities.
An EV infrastructure investor app could also assist EV charging infrastructure investors and other stakeholders by “providing trusted curated data and models at the intersection of energy system capacity, EV charging demand and public policy – in alignment with the UK’s net-zero goals”, the report added.
The increased production of EVs and charging ports will also require further investment in electric utilities so that they have the capacity to meet increased demand, according to Moody’s Investors Service.
“The funding challenge of EV infrastructure includes the chicken and egg scenario of revenue clawback being hampered by low initial adoption creating uncertainty about large scale deployment,” said Chris Pateman-Jones, CEO of EV infrastructure provider Connected Kerb. “Collaboration between the private and public sector is critical to overcoming these concerns.”
In July, the UK Department for Transport published the Transport Decarbonisation Plan. This included a range of measures to ensure the vehicle charging network will be able to keep up with demand during the transition to EVs, such as introducing 6,000 charging points across England’s road network by 2035.
The UK government also recently published its Net Zero Strategy, which includes targets such as ending the sale of all new, non-zero emission road vehicles by 2040, committing £620 million to support the transition to electric vehicles and creating at least one “zero emission transport city”. The strategy also outlined plans to introduce a zero-emission vehicle mandate, setting targets that will require a certain percentage of manufacturers’ new car and van sales to be zero emission each year from 2024. Further, the government will support the delivery of 4,000 new zero emission buses – either electric or hydrogen – and the infrastructure needed to support them, representing 12% of England’s local operator bus fleet.
Around 25% of the government’s own car fleet will be “ultra low emission” by December 2022, and the government’s entire car and van fleets will be zero emission by 2027.
“Decarbonising road transport, key to meeting our national emissions targets, is a challenge that’s too large and interconnected for any one part of the market to solve alone,” said Dr Rhian-Mari Thomas, GFI CEO. “We need radical collaboration through public and private partnerships across finance and industry focused on tackling the barriers and unlocking the estimated £150 billion of investment that’s required to accelerate the pace of change.”
Thirty countries also agreed to work together to introduce accessible, affordable and sustainable zero emission vehicles by 2030 or sooner during Transport Day at COP26. This includes a number of emerging markets, such as India, Rwanda and Kenya. Efforts will be overseen by the Zero Emission Vehicle Transition Council (ZEVTC), with the US and UK serving as co-chairs.