‘Green’ cars could cost Treasury £170bn in lost taxes if BPVs and HPVs drive diesel and petrol vehicles off the road

RACING AHEAD: An HPV fuelling station for hydrogen powered vehicles in Germany
RACING AHEAD: An HPV fuelling station for hydrogen powered vehicles in Germany

A national system of road tolls could be introduced to meet the estimated £170 billion shortfall in British fuel tax over the next 13 years, says a right-leaning think tank.

The Policy Exchange, which was co-founded by the Conservative minister Michael Gove, says that an increase in the number of BPVs (battery-powered vehicles) will lead to a drop in sales of petrol and diesel, on which further VAT is paid.

It adds that the government may have underestimated the cost to the Treasury of BPVs by £23 billion a year by 2030.

The fall in the amount of income from petrol and diesel sales could be as high as £170 billion between now and the end of the next decade, it estimates.

The Financial Times explains: “The Office for Budget Responsibility, whose projections underpin government planning, says proceeds [from fuel duties] will increase from the current £28 billion a year to £40 billion by 2030.

“Yet, if Britain succeeds in meeting targets for reducing carbon emissions from road transportation, fuel duty revenues would be between £9 billion and £23 billion lower in 2030 than the OBR is assuming, according to Policy Exchange.”

An inconvenient fact for the Treasury is that in order to limit temperature increase below 2ºC the number of BPVs (battery powered vehicles) on the roads needs to reach 600 million globally by 2040, according to the International Energy Agency’s new report.

And as well as BPVs, HPVs – hydrogen powered vehicles – also offer an environmentally-friendly alternative to traditional internal-combustion engine (ICE) vehicles. But these too would, ultimately, decimate demand for petrol and diesel fuels.

The idea of modern ‘spy-satellite’ road-toll charging died a political death when proposed by former Labour prime minister Gordon Brown 10 years ago after more than 2 million people signed a petition against the toll-tax plan, fearing that there would have been no compensatory reduction in petrol and diesel taxes.

This may be an idea whose time will come if BPVs and HPVs – literally –  drive ICEVs off the road.

Already, there are some 5,000 emission-free, climate-friendly fuel cell-powered HPVs already motoring on roads around the world. Like cars equipped with conventional power trains, they have a long service life, can travel far, and be refuelled quickly – an advantage over BPVs.

Some local authorities in Scotland already run a handful of HPV vans, trucks and buses – but the nation still lags far behind fellow EU members, such as Germany.

Hydrogen infrastructure and hydrogen refuelling stations are going up worldwide as manufacturers roll out the first mass-produced models of these cars.

Currently, 260 hydrogen refuelling stations are in operation, but the count is expected to rise to 3,500 by 2025, with 600 in place in the USA, 830 in Asia and 2,000 in Europe.

Germany plans to extend its installed base of around 25 stations to 400 by 2025. The number of fuel-cell vehicles is to top the 300,000-mark by this time.

In Germany, HPV re-fuelling station are being carried out in close cooperation with the NOW (National Organization of Hydrogen and Fuel Cell Technology) and the associated partner CEP (Clean Energy Partnership), a network of key automotive companies, gas producers and refuelling station operators.

The German Federal Ministry of Transport and Digital Infrastructure is funding this project with grants totalling some £3 million as part of the National Innovation Program for Hydrogen and Fuel Cell Technology.

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