Feature ELECTRIC DREAMS
The internal combustion engine is an endan- gered species. Its death warrant was signed by prime minister Boris Johnson last year when he banned the sale of new petrol and diesel vehicles from 2030. Any new car or van sold in Britain from this date must be powered by elec- tricity, although some petrol-electric hybrid models will get a further five years grace. The move is part of the government’s plans to decarbonise the UK economy by 2050. The public appear to be behind the strategy, with sales of electric cars jumping 186% during 2020, or by 108,000, according to the Society of Motor Manufacturers and Traders. There are reported to be around 200,000 elec- tric cars driving on Britain’s roads today and their number is expected to accelerate. In May, 6.5 million people told energy watchdog Ofgem that they intend to buy an electric vehicle within the next five years. This is one in four (24%) British households, and their motiva- tions for ditching petrol for battery-powered vehicles is clear. Cars, vans, trucks and buses in developed econ- omies are responsible for almost a third (30%) of the world’s harmful gas emissions, the United Nations believes. In the UK, the govern- ment puts the figure at 27%, so failing to make our roads cleaner greatly reduces the chances of the UK achieving carbon neutrality. To help make this transition easier, Johnson has com- mitted £2.8bn to the strategy. But is this enough? Having sufficient infrastructure to facilitate a switch to battery-powered cars within nine years is ambitious. Unless the high cost of vehicles, not having charge points close to eve- ry home in Britain and batteries that are only powerful enough to drive short distances are tackled, the government is unlikely to see wide- spread use of electric vehicles.
Another concern is whether the national grid will have the capacity to satisfy the increase in demand. This has been given more weight in the debate considering the rises in energy prices this year partly caused by a supply-de- mand imbalance. “The UK’s 2030 target could be achievable,” says Rebecca White, a responsible investment analyst at Newton Investment Management.
Feb 2022 portfolio institutional roundtable: Sustainable investing 27
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