Leasing Panel: Clean Air Zones

With London’s Ultra-Low Emission Zone (ULEV) coming into effect next year, and other Clean Air Zones set to be operational by 2020, what should fleets do to prepare? We ask our leasing experts for their advice

As part of the government’s plans to clean up air pollution, Clean Air Zones have been proposed for the most polluting areas in the UK, to be operational by 2020. As it stands, these are Birmingham, Derby, Leeds, Nottingham and Southampton. London has its own Ultra-Low Emission Zone (ULEZ) coming into effect in April 2019, and Sadiq Khan has recently confirmed plans to extend the zone to the North and South circular boundary in 2021, making it an area 18 times that of the central London zone. Scotland will be introducing four Low Emission Zones, with the first one to be introduced in Glasgow by the end of the year.

The implementation of Clean Air Zones have been left to local authorities and a £220m Clean Air Fund has been made available to them to help them take action.

However, not much is know about how the clean air zones will work – some may charge non compliant vehicles, while others may not. This leaves fleets operating left in the dark and unsure of how to prepare.

“The reality is that we don’t yet know enough about clean air zones to advise clients,” comments Mark Gallagher from Grosvenor Leasing. “How they will look and be put together will be down to each local authority to decide and we can only guide our clients when each authority sets their plans out with clarity.”

With regards to London’s ULEZ, where more information is known, Mark says: “The practical advice for those working in and around London is that they need to look at their fleet and if its not Euro 6 compliant, then maybe reallocate vehicles to other parts of the country, where possible.

“However, bear in mind that cars will need to be close to four years old to be affected. Euro 6 vehicles won’t need to pay a T-charge, and that came into force in Sept 2015 for cars and Sept 2016 for vans, so many of our clients may not be hugely affected.”

Rob Mills from Daimler Fleet Management sees the introduction of air quality measures as an opportunity for organisations to review their whole fleet. He says: “Now is the time for fleet managers to be sitting down with their leasing partners and seeking consultative advice as to what positive changes can be made to run an ever cleaner fleet. The fact is that traditionally fuelled vehicles may still be the most cost efficient option for a lot of their drivers who will remain unaffected by these zones. Fleet managers also need to decide if a move to electric is a purely monetary decision or do their directors potentially have a corporate responsibility to uphold too.”

Rob continues: “Once they have determined how many of their vehicles regularly enter the proposed ULEZ and other Clean Air Zones they will be in a better position to make informed decisions and cost analysis. What percentage of their fleet will be affected? Which vehicles could be changed to either pure electric or plug-in hybrids? Do their vehicles even need to enter Clean Air Zones at all? Could employees be incentivised to complete their journeys using public transport to enter cities that have Clean Air Zones? And if they run LCV fleets, could utilising services such as ‘last mile delivery’ companies be more cost affective then amending their fleet line up?”

Which fuel?

There is a lot of negativity surrounding diesel at the moment. The dieselgate scandal with Volkswagen opened the flood gates for more and more exposure on the health risks associated with older diesels. More is also being reported on how accurate lab based emissions tests actually are compared to real world driving. Only recently, an emissions-measuring project by the TRUE initiative said that all Euro 6 diesel models exceed the Euro 6 diesel NOx emissions limits measured in real-world driving.

To better join up the gap between quoted and actual on-the-road mpg figures, the new WLTP procedure for measuring emissions and fuel economy has been put in place.

There are, however, positive messages coming from the government and industry about their investments in alternative fuelled vehicles and their associated refuelling infrastructure.

So, with all this going on, how have people’s attitudes to fuels changed, if at all?

Rob Mills believes that the negativity surrounding diesel has undermined the fact that diesel cars are now cleaner than ever and that manufacturers have had considerable success in launching new models where NoX emissions have been significantly reduced.

It is a view shared by Mike Hawes from the Society of Motor Manufacturers and Traders (SMMT), who has said a lot of reporting about diesel has failed to differentiate between new and vehicles of the past. He said: “Euro 6 diesel cars on sale today are the cleanest in history. Not only have they drastically reduced or banished particulates, sulphur and carbon monoxide but they also emit vastly lower NOx than their older counterparts – a fact recognised by London in their exemption from the Ultra Low Emission Zone that will come into force in 2019.”

Rob Mills believes that the positive result to the diesel backlash is the growing number of alternatively fuelled models becoming available, and that it has opened the eyes of some fleet managers to consider other options. He said: “The negative publicity around diesel, no matter which side of the argument you sit, has at least led to the expansion of some exciting choices for customers and has prompted fleet managers to consider options previously outside of their comfort zones, whether that be alternative fuel types or new mobility solutions with a greater focus on business use and needs rather than simply availability and opinion.”

Mark Gallagher has seen a definite shift with customers who previously ran all-diesel policies now allowing other fuel types into the choice lists. However, Mark believes that fleet buyers can sometimes find themselves “between a rock and a hard place” because diesel is still the most viable option. He explains: “Many drivers still only see petrol as the viable alternative to diesel, but when they look at comparable petrol models, they see the chance that their fuel bill and CO2 will go up, hence costing them more. So it leaves them between a rock and a hard place because they read the dirty diesel headlines, are being given better choices of vehicle and fuel types, but still conclude that diesel is right for them.”

“There is also a hesitancy by some drivers to adopt alternative fuels, even when they are placed into their choice lists, yet this is changing over time and more are now choosing ULEVs and EVs than ever before,” Mark adds.

More realistic tests

The Worldwide Harmonised Light Vehicle Test Procedure (WLTP), which promises more realistic emissions and fuel economy performance data, is now being used on new vehicles.

The new laboratory tests will measure everything from fuel consumption and carbon dioxide, to nitrogen oxides, particulates, and carbon monoxide. Crucially, on‑road testing will also take place to gain ‘real-world’ emissions data.

Cars tested under WLTP will still have NEDC CO2 and fuel consumption values reported until 2020. Cars approved under WLTP will continue to be taxed against the NEDC CO2 emission value, so there is no change to the CO2-based taxation systems in the short term. This includes vehicle tax (VED) and company car tax (BIK).

But WLTP is likely to result in higher CO2 values for many vehicles and more needs to be done to resolve the lack of clarity around BIK from 2020/21.

Rob Mills commented: “Ultimately the release of new WLTP figures should be looked on positively by fleet operators. The new figures are intended to reflect real life driving more accurately and will provide greater insight into the Whole Life Cost (WLC) of running a fleet.

“Positive impacts can be made on areas such as fuel management where fleet managers will soon have greater accuracy surrounding both driver and vehicle performance.

“Fleet managers should already be in the habit of regularly reviewing their fleet policies and vehicle selections to ensure they are meeting the needs of both the business and also the driver. In that respect the affect WLTP is having on fleet managers is no different. We are offering our customers support and guidance around model mix and fuel choices in exactly the same way we do when new model releases hit the market or each year when the rates of VED are reviewed.

“Whilst the manufacturers work through their WLTP requirements, we would advise not making drastic policy changes. HM Treasury has confirmed that it will not be using CO2 values from WLTP for tax purposes (both VED and company car tax) right away, so there is no need at this stage for any knee jerk reaction from car fleet operators.”

Mark Gallagher comments: “The advice we are giving is to allow some movement in your BIK calculations when placing orders, and to also expect lead times to vary and, at worst, orders to be cancelled as the manufacturer withdraws a vehicle at short notice.

“We recently sent our customers a full lead-time vehicle availability schedule across all manufacturers to give them a flavour of what’s happening, but it’s a moving beast and we all must appreciate that.

“It’s a rough ride but what we will have on the other side is a far better approach to emissions testing and reporting, making the short-term pain worthwhile.”