23 July 2021

Transport Decarbonisation Plan - Key Take-Aways for Logistics

The Government has published its most recent plan to decarbonise the transport system in the UK. "Decarbonising Transport: A Better, Greener Britain" (the TDP) is intended to be a "greenprint" for the UK's road to a net zero transport industry by 2050. The publication of the plan is particularly timely given that the UK will be hosting the UN Climate Change Conference (COP26) in Glasgow later this year.

The key points in the TDP from a logistics perspective are:

Phase out of polluting vehicles

The intention is for the sale of new petrol and diesel HGVs to end by 2040 (or 2035 for HGVs under 26 tonnes). This timeline is, however, subject to public consultation, which opened at the same time as the publication of the TDP.

Incentives to decarbonise

The Government has committed to providing a package of financial and non-financial incentives to accelerate the move towards a greener logistics industry, including in relation to the use of zero emission trucks. Whilst no new schemes are announced, the TDP refers to the grants that are already available for specific truck models that cover 20% of the purchase price (up to a maximum of £16,000). It is unclear, however, how long these existing grants will be available for and what other incentives might be announced in the future.

Shift to alternative delivery methods

One of the clear themes in the TDP is the intention to move away from road and aviation haulage towards more environmentally-friendly options, including rail and inland waterways. According to 2019 Department for Transport statistics, 18% of road transport emissions are attributable to HGVs and therefore this modal shift is intended to address the corresponding environmental impact.

The TDP has been broadly welcomed by many in the industry. This includes the Director of Policy at Logistics UK, who has welcomed the "confidence and clarity" that the plan will provide to logistics businesses on the next steps they will need to take on the road to net zero.

Nevertheless, the TDP still presents a number of potential challenges for developers and operators of logistics warehouses, including:

Level of technology

Whilst the TDP mentions that zero emission trucks are already entering into the market, these vehicles are still in the infancy of their development. The TDP specifically refers to the DAF LF Electric truck as a case study, which has a 175-mile range on a single charge. Clearly, the range of these vehicles will need to significantly increase before they are adopted wholesale across the industry for long-distance deliveries.

Cost

One of the main concerns regarding the TDP is who will pay for the decarbonisation agenda, especially once current financial incentives are tightened. The higher cost of green technologies compared to their fossil fuel counterparts has, of course, been a significant constraint for the adoption of green technologies across society and clearly the cost of greener delivery vehicles will still be a barrier for many businesses for some time to come. The adoption of electric- or even hydrogen-powered HGVs will also mean that existing fleets will depreciate in value, which presents an additional cost to businesses.

Infrastructure

The use of greener HGVs will require logistics warehouses to have in-built electric charging points. This will have an impact on the cost and complexity of warehouses, which will need to be factored into the development of new sites and the retrofitting of existing buildings. The installation of electric charging points will also put pressure on the national grid infrastructure, particularly in concentrated locations where a number of logistics warehouses are based.

Location

The adoption of alternative methods of freight will also affect developers' decisions over where they acquire land for development going forward. Warehouses will need to be built closer to existing rail networks and waterways in order for the TDP's modal shift away from road haulage to be successful. Tesco's recent £5 million investment into their rail delivery network may be a sign of things to come in this area.

For additional insight and commentary on sustainability and the wider topic of ESG, please visit our dedicated, cross-industry Sustainability and ESG hub.

Dan is an Associate in our Construction team.


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