department for transport sustainability update · department for transport sustainability update...

MARCH 2019

Memorandumto the House of CommonsEnvironmental Audit Committee

Department for Transport sustainability update

Our vision is to help the nation spend wisely.

Our public audit perspective helps Parliament hold government to account and improve public services.

The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund, nationally and locally, have used their resources efficiently, effectively, and with economy. The C&AG does this through a range of outputs including value-for-money reports on matters of public interest; investigations to establish the underlying facts in circumstances where concerns have been raised by others or observed through our wider work; landscape reviews to aid transparency; and good-practice guides. Our work ensures that those responsible for the use of public money are held to account and helps government to improve public services, leading to audited savings of £741 million in 2017.

Contents

Introduction and Summary 4

Part OneDecarbonisation and renewable energy targets 11

Part TwoUltra-low emission vehicles 20

Part ThreeAir quality and the Volkswagen recall programme 26

Part FourRail Sector 36

Part FiveSustainability reporting 41

Part SixGovernance and oversight 44

If you are reading this document with a screen reader you may wish to use the bookmarks option to navigate through the parts.

The National Audit Office team consisted of Katy Losse, Liam Blanc, James Gjertsen, Angie Eagle and Jonathan Hyde, under the direction of Keith Davis.

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4 Introduction and Summary Department for Transport sustainability update

Introduction and Summary

1 This memorandum responds to a request from the Environmental Audit Committee (the Committee) to follow up the Department for Transport (DfT)’s progress on the Committee’s recommendations for improving its approach to sustainability. The Committee made these recommendations in a 2016 report which drew on a previous National Audit Office (NAO) review of sustainability at DfT.

2 Our review of sustainability at DfT was the fourth in a series of sustainability overviews that we have prepared for the Committee, which have assessed how different parts of government have fulfilled their sustainability remit. It gave a high-level assessment of DfT’s approach to environmental sustainability across all aspects of its day-to-day activities, covering governance, operations, procurement and policy. We concluded that DfT had taken many positive steps to meeting the challenge of sustainability in the transport sector, particularly in respect of its internal processes and interactions with other parts of government. However, there was now an opportunity to build on this to act as a leader for sustainability in the transport sector, and to ensure that the environment was fully considered across all decisions.

3 The recommendations in the Committee’s subsequent report fall into six broad areas, covering:

• national targets, for renewable energy and greenhouse gas emissions;

• ultra-low emission vehicles;

• air quality and the Volkswagen recall programme;

• the rail sector;

• sustainability reporting; and

• governance and oversight.

4 This memorandum gives our assessment of DfT’s progress against the Committee’s recommendations as at March 2019. We have drawn on semi-structured interviews with relevant DfT staff, internal DfT documents and public literature. We have not sought to give an exhaustive analysis of the effectiveness of DfT’s current approach, and instead have focused on analysing the extent and significance of the main changes DfT has made. The memorandum is divided into six sections covering the six broad areas of the Committee’s recommendations (paragraph 3), and each section includes a summary of the Committee’s recommendation and a summary of progress, together with a more detailed analysis.

DRAFT C&AG’S REPORT FOR ACCOUNTING OFFICER CLEARANCE

Department for Transport sustainability update Introduction and Summary 5

Summary of progress

5 Overall, we found that DfT’s progress against the Committee’s recommendations is mixed. It has made good progress on two issues: renewable fuel for transport and appraisal guidance on air quality impacts. It has also taken important steps on the Committee’s recommendations on decarbonising transport as a whole, on the uptake of ultra-low emission vehicles, and on the Volkswagen Group recall programme. However, it has some way to go to implement these recommendations fully. Moreover, there are recommendations where DfT has made no substantive changes, such as on assessing cumulative impacts, and in two areas (sustainable procurement and requirements on environmental targets for the rail sector) DfT’s approach has deteriorated.

Key findings

6 We found that DfT has made good progress on the Committee’s recommendations on renewable energy (Figure 1). While it has not established a separate target in UK law for 10% of renewable energy in transport in 2020, it has made legislative changes that it expects to have a similar effect. In 2017 government amended the Renewable Transport Fuel Obligations to increase requirements on fuel suppliers to use sustainable and renewable sources. It forecasts that this will mean that the use of renewable fuels in the UK will increase to just over 10% of transport energy demand in 2020 (as measured under the accounting rules of the EU Renewable Energy Directive) (paragraphs 1.6 to 1.11).1,2

7 DfT is also on track to meet the Committee’s recommendation to improve the way that transport appraisals factor in air quality impacts. In 2017 government reconvened an Interdepartmental Group on Costs and Benefits (IGCB) to examine how government project appraisal could better reflect the true cost of air pollution. This group proposed new draft figures for valuing the health effects of nitrogen dioxide and fine particulate matter in May 2018. Its analysis drew on work conducted by Public Health England and an independent expert group (Committee on the Medical Effects of Air Pollution) and proposed that appraisals should use damage costs that reflect a wider range of health impacts when assessing the impacts of air pollution. The Department for Environment, Food & Rural Affairs (Defra) updated its guidance on valuing air pollution accordingly in January 2019, and DfT told us that it is on track to implement equivalent updates to transport project appraisal guidance by May 2019 (paragraphs 3.3 and 3.4).

1 The Renewable Transport Fuel Obligations and the EU Renewable Energy Directive allow multiple-counting of certain types of biofuels, such as waste-derived fuels, to incentivise these markets.

2 Energy cannot be multiple-counted towards the overall renewable energy target set by the EU Renewable Energy Directive, meaning that if multiple-counting is used to meet the transport sub-target then other sectors must over-perform for the UK to meet the overall target.



8 Progress on some other issues, however, has been more mixed:

• Decarbonisation: In its 2016 report the Committee raised a concern that transport emissions were not on track to fall quickly enough, with a 50% shortfall in 2025 against the cost-effective path for reductions recommended by government’s independent advisers on climate change (the Committee on Climate Change, CCC). It recommended that DfT tackles this shortfall. Since 2016, government has published four strategies relating to its approach to decarbonising transport, covering its overall approach, investment in cycling and walking, and tackling emissions from road transport and shipping. CCC’s analysis suggests that these strategies will help close the gap against its cost-effective path by 2025, if they are translated into firm and funded plans. However, it considers that there will still be a 35% shortfall by 2025 even if the strategies’ ambitions are realised in full, and on the basis of firm and funded policies alone the gap remains at 50% (paragraphs 1.1 to 1.5).

• Ultra-low emission vehicles: DfT rejected the Committee’s recommendation to set a clearer market share target for 2020 for ultra-low emission vehicles (ULEVs), but its 2018 ‘Road to Zero’ strategy did incorporate new long-term market share targets, for at least 50% of all new car and van sales in 2030 and an end to the sale of conventional vehicles in 2040. DfT‘s modelling indicates that ULEVs could account for around 5.7% of new car registrations in 2020 if current grants are maintained at the same rate, and around 3.7% if grants were removed for the full year of 2020. This would mean take-up would fall well short of the 9% market share of new cars and vans that the CCC recommends for a cost-effective path to reducing transport carbon emissions (paragraphs 2.1 to 2.9).

• Volkswagen recall: DfT considers that it has gone as far as legally possible in meeting the Committee’s recommendations relating to Volkswagen Group’s use of ‘defeat devices’ to manipulate vehicle emissions tests. Volkswagen Group has fixed around three-quarters of the 1.2 million vehicles in the UK fitted with defeat devices, but progress on the recall programme has slowed considerably. The Committee had recommended DfT set a clear recall timeline with sanctions for failure, but DfT told us that it could not do so because under current legislation, government has no powers to sanction Volkswagen Group for any failures to complete the recall programme nor any power to compel the remaining vehicle owners to get their vehicles fixed. The Committee also recommended that DfT consider legal action against the company. However, the legal advice it received was that it had no grounds for action against Volkswagen Group as a whole, and as a result any UK action is dependent upon the outcome of an ongoing German investigation into the matter (paragraphs 3.10 to 3.16).



9 There are Committee recommendations where DfT has made no substantive changes. In particular, it does not plan to implement the Committee’s recommendation to monitor the total cumulative environmental impacts of all its projects. DfT argued that it would not be practical to do so because it has such a broad and changing portfolio of work, but instead considers it can most successfully assess and monitor environmental impacts on a project-by-project basis. DfT’s original response to the Committee’s recommendations gave the example of high-speed rail and road investment as two areas where the delivery bodies involved (High Speed 2 Ltd and Highways England) have long-term environmental commitments that they are responsible for managing. A key commitment on the new high-speed railway is no net loss of biodiversity through its construction. A 2017 analysis of High Speed 2’s potential biodiversity impact, commissioned by HS2 Ltd, concluded that while good progress had been made, the goal of no net loss had yet to be achieved. However, DfT told us that it expects further action to be taken as the design develops that will lead to a final position of no net loss. Stakeholders remain concerned about its impact on irreplaceable ancient woodlands. Highways England is not on track against some key environmental targets, including managing nationally important sites for wildlife and establishing wildflower grasslands (paragraphs 6.3 to 6.7).

10 In two areas DfT’s approach to the issues covered by Committee recommendations has deteriorated: it no longer monitors compliance with Government Buying Standards, and its high-level specification of requirements to the rail sector no longer covers environmental issues (paragraphs 6.11 to 6.15 and paragraph 4.2).

Figure 1Summary of fi ndings by Environmental Audit Committee recommendation

Issue Recommendation1 Progress as at March 2019 Rating

National targets (Part One)

Set out plans for tackling the shortfall against the cost-effective path for reducing transport carbon emissions.

Since 2016, government has published four strategies on decarbonising transport, covering its overall approach, investment in cycling and walking, and tackling emissions from road transport and shipping. The Committee on Climate Change (CCC) considers that these strategies will help close the gap against a cost-effective path for reducing transport emissions by 2025, if they are translated into firm and funded plans. However, CCC’s analysis suggests that there will still be a 35% shortfall against this cost-effective path by 2025 even if the strategies’ ambitions are realised in full. On the basis of firm and funded policies alone the gap remains at 50% (paragraphs 1.1 to 1.5).

Amber

Retain the EU’s renewable energy target in UK law and establish a transport sub-target.

Although government has not established a separate target in law for renewable energy in transport, it has increased requirements on fuel suppliers through the Renewable Transport Fuel Obligations, which it expects to have a similar effect (paragraphs 1.6 to 1.11).

Green




Ultra-low emission vehicles (Part Two)

Be more specific about a market share target for ultra-low emission vehicles (ULEVs) in 2020.

The Department for Transport (DfT) has not set a more specific market share target for ULEVs for 2020. Its modelling indicates that ULEVs could account for around 5.7% of new car registrations in 2020 if current grants are maintained at the same rate, and around 3.7% if grants were removed for the full year of 2020. This would mean take-up would fall well short of the 9% market share of new vehicles that the CCC recommends for a cost-effective path to reducing transport carbon emissions (paragraphs 2.1 to 2.5).

Red

Clarify the approach to incentivising the uptake of ULEVs.

In 2018 government published a new strategy for ULEVs, the ‘Road to Zero’, which included targets for the medium-to-long-term, of at least 50% ULEV market share by 2030 and to end the sale of conventional cars by 2040. Government has also set out proposals for incentivising ULEVs that cover some of the issues recommended by the Committee. DfT and HM Treasury have not set out how they will develop fiscal proposals for ULEVs beyond 2020, to increase uptake while maintaining revenues for the Exchequer (paragraphs 2.6 to 2.9).

Red/ Amber

Air quality and the Volkswagen recall programme (Part Three)

Retain and continue to work towards the air quality targets set out in the Ambient Air Quality Directive after EU Exit.

The air quality targets from the Ambient Air Quality Directive have been transposed into UK law and will remain binding on the government after EU Exit (paragraphs 3.1 to 3.2).

Green

Ensure that the value of air quality is properly reflected in the Transport Analysis Guidance.

The Committee on the Medical Effects of Air Pollution advised how the health effects of air pollution could be better accounted for in government project appraisal, and these will be reflected in transport appraisal guidance from May 2019 (paragraphs 3.3 to 3.4).

Green

Press the European Research on Mobile Emission Sources Group (ERMES) to conclude whether the current air quality models are accurate in light of the Volkswagen scandal, and state clearly whether this means air quality plans need revising.

Since 2016, several bodies, including DfT, have conducted research into road vehicles’ real-world emissions, which has been used to create new guidance for air quality models. This new guidance was used to produce the DfT’s 2017 Air Quality Plan. A 2018 High Court ruling found that the modelling showed no clear “legal error or irrationality” (paragraphs 3.5 to 3.6).

Green

Make dedicated funding available to allow local authorities to tackle air quality issues

DfT has made £495 million of dedicated funding available for local authorities to enact measures to meet clean air targets as quickly as possible (paragraphs 3.7 to 3.9).

Green

Set a clear vehicle recall timeline for Volkswagen, with sanctions for failure

Volkswagen Group has fixed around three-quarters of the 1.2 million vehicles in the UK fitted with defeat devices, but progress on the recall programme has slowed considerably. Under current legislation, the government has no powers to sanction Volkswagen Group for any failures to complete the recall programme nor any power to compel the remaining vehicle owners to get their vehicles fixed (paragraphs 3.10 to 3.13).

Amber

Figure 1 continuedSummary of fi ndings by Environmental Audit Committee recommendation




Measure the precise contribution that Volkswagen cheat devices made to meeting the Euro 5 standards and conclude whether there are grounds for legal action against Volkswagen.

Government research, published in April 2016, clearly demonstrated that the defeat devices made a significant contribution to the Volkswagen vehicles meeting the Euro 5 standards. However, the legal advice it received was that it had no grounds for action against Volkswagen Group as a whole, and as a result any UK action is dependent upon the outcome of an ongoing German investigation into the matter (paragraphs 3.14 to 3.16).

Amber

Rail sector (Part Four)

New carbon emission reduction targets for the rail sector.

DfT has not set any new sector-wide carbon reduction targets for rail. The sector is not on track to meet its existing carbon efficiency targets, which come to an end in March 2019. In February 2018, the Minister for Rail challenged the industry to remove all diesel-only trains from the network by 2040 and to provide a vision for how it will decarbonise. The industry has responded by establishing a decarbonisation ‘taskforce’, which has committed to include “stretching aspirations” in its final report, due to be published in spring 2019 (paragraphs 4.1 to 4.7).

Red

Include Network Rail in the Greening Government Commitments.

Network rail has not been included in the list of departmental bodies expected to report against the Greening Government Commitments. Its public reporting falls well short of the requirements under those commitments. After we shared this memorandum in draft with DfT, it informed us that Network Rail and the Rail Minister have agreed that Network Rail will be included in the Greening Government Commitments from 2020 (paragraphs 4.8 to 4.9).

Red/ Amber

Sustainability reporting (Part Five)

Communicate more specific, measurable, achievable, relevant, time-bound (SMART) objectives for sustainable transport.

Report on these objectives in the annual report.

Since 2016, DfT has made limited progress in reporting more SMART objectives to the transport sector. In particular, DfT has failed to communicate clear, defined objectives when setting new policies and strategies, such as its Road to Zero strategy. While its most recent annual report does include commentary on the work being done to address the UN’s Sustainable Development Goals, its reporting against the Greening Government Commitments is less comprehensive than at the time of the last Committee hearing (paragraphs 5.1 to 5.6).

Red

Governance and oversight (Part Six)

Take a cross-departmental approach. There remain good examples where DfT works proactively cross-government, but more could be done to identify and actively pursue opportunities (paragraphs 6.1 to 6.2).

Amber

Assess cumulative impacts. DfT does not monitor the cumulative environmental impacts for all its projects taken together. This could put finite environmental resources, such as ancient woodland, at risk (paragraphs 6.3 to 6.7).

Red





Governance and oversight (Part Six) continued

Consider whether environmental issues are considered sufficiently below board level.

DfT believes its current arrangements for considering environmental issues below board level are sufficient, and has an environmental strategy team responsible for promoting consideration of environmental issues across the Department. One of the Committee’s key concerns related to DfT’s ability to take a ‘cross-modal’ approach and identify solutions to transport problems outside individual transport sectors. While DfT has not introduced any new mechanisms to ensure routine consideration of cross-modal solutions, there are examples since 2016 where it has sought to take a cross-modal approach (paragraphs 6.8 to 6.10).

Amber

Improve compliance with Government Buying Standards for procurement.

DfT no longer monitors compliance with Government Buying Standards (paragraphs 6.11 to 6.15).

Red

Good progress, with the recommendation mostly or fully implemented.

Mixed progress, with important steps having been taken to tackle the issue,but with some way to go before the recommendation is fully implemented.

No or very little progress.

Notes

1 This table gives a condensed summary of the Committee’s recommendation. More detail is in the relevant Parts of this memorandum.

Source: National Audit Offi ce analysis



Department for Transport sustainability update Part One 11

Part One

Decarbonisation and renewable energy targets

Environmental Audit Committee recommendation on meeting decarbonisation targets

Set out plans for tackling the shortfall against the cost-effective path for reducing transport carbon emissions

The Department for Transport (DfT) should set out how it plans to deal with the shortfall against the Committee on Climate Change’s (CCC’s) interim 2025 decarbonisation objective on the cost-effective pathway to meeting the UK’s 2050 carbon

reduction commitments.

Summary of progress

Since 2016, government has published four strategies on decarbonising transport, covering its overall approach, investment in cycling and walking, and tackling emissions from road transport and shipping. The Committee on Climate Change (CCC) considers that these strategies will help close the gap against a cost-effective path for reducing transport emissions by 2025, if they are translated into fi rm and funded plans. However, CCC’s analysis suggests that there will still be a 35% shortfall against this cost-effective path by 2025 even if the strategies’ ambitions are realised in full. On the basis of fi rm and funded policies alone the gap remains at 50%.


12 Part One Department for Transport sustainability update

More detail on progress

1.1 Reducing greenhouse emissions from transport is critical to meeting the Climate Change Act 2008 requirement for an 80% reduction in greenhouse gas emissions compared to 1990 levels by 2050. The transport sector continued to be the largest emitting sector in the UK in 2018, accounting for just over a quarter of total emissions. The Act does not specify the rate at which individual sectors must decarbonise, but instead requires government to set legally binding ‘carbon budgets’ (which set restrictions on the amount of greenhouse gases the UK can emit over five-year periods) at an economy-wide level. An independent body (the CCC) advises government on the cost-effective path for reductions in different policy areas.3 CCC’s advice in 2016 was that this cost-effective path for transport should involve a steady profile of reductions out to 2032, with emissions from the sector falling to around 80 million tonnes of carbon dioxide (MtCO2) by 2025 (Figure 3 on page 14).

1.2 Since 2016 government has published four strategies that cover its approach to decarbonising transport:

• A statutory cycling and walking investment strategy (April 2017), which seeks to increase journeys by cycling or on foot; a key part of government’s approach to encouraging low-carbon alternatives to car journeys.

• A Clean Growth Strategy (October 2017), which summarised government’s latest overarching plan for moving to a low-carbon economy, including for low-carbon transport.

• A ‘Road to Zero’ strategy (July 2018), which set out plans for reducing emissions from road transport in more detail.

• The Maritime 2050 strategy (January 2019), which considered how the wider environmental impact of shipping could be reduced, as part of an analysis of how the maritime sector should develop over the medium- and long-term. More detail on how greenhouse and air pollutant emissions will be tackled is to be included in the Clean Maritime Plan, due in spring 2019.

• Government is also currently consulting on a strategy for aviation, which will include a section on the sustainable growth of the sector.

1.3 The extent to which these strategies committed to new targets and firm and funded proposals for decarbonising transport varies. The Maritime 2050 strategy only includes broad commitments for government to consider issues in the future (Figure 2). For road transport, the strategies incorporated significant new targets, such as ending the sale of conventional cars by 2040, and some new policy initiatives, such as an awareness campaign for Ultra-Low Emission Vehicles (ULEVs), see Part Two.

3 CCC’s cost-effective path shows where the cost to implement polices is less than the carbon cost associated with not implementing them.



Figure 2Maritime 2050

Purpose of the strategy

Set out a high-level vision for the future of the UK maritime sector to 2050.

Establish a framework to inform policy development and industry decision-making.

For the environment, to push the maritime sector to play its part in achieving the ambitions in government’s 25-year Environment Plan and Clean Growth Strategy.

The significance that the strategy places on decarbonising shipping

Shipping is seen as one of the most efficient modes of transport for carbon dioxide emissions, but it is nevertheless a substantial source of emissions: estimated to comprise 3.4% of greenhouse gas emissions in the UK in 2016.

No detailed forecasts for future emissions but the strategy notes that the International Maritime Organization has estimated that global emissions from shipping could increase by between 50% to 250% by 2050, driven by a growing population and the shift of the centre of global economy further eastwards, to China. It argues that as emissions from other sectors decline this could mean global shipping emissions grow from 2.2% of total emissions in 2012 to 17% of total emissions in 2050.

Proposals for decarbonising shipping

The strategy includes 23 short-term, seven medium-term and two long-term proposals for the environment. For decarbonisation, these include that government will:

in the short term (1–5 years)

• publish the Clean Maritime Plan by spring 2019, which will set out more detailed policy commitments and recommendations for decarbonising shipping;

• assess how economic instruments could support the transition to zero-emissions shipping;

• consider the environmental case for coastal shipping, and whether it should encourage a modal shift towards it;

• consider options to support the development of technology that enables monitoring and enforcement of any new regulations governing emissions of greenhouse gases;

• set up a Clean Maritime Council of industry experts to ensure strong collaboration between government, industry and academia; and

• consider the merits of introducing a medium-term target for emissions of greenhouse gases and air quality pollutants.

in the medium term (5–15 years)

• aim to launch a set of ‘zero emission shipping ambitions’, which could include the commitment for at least one major port to have all ship-side activity zero emissions (for example, using renewable fuel for on-loading and off-loading); and

• consider how the Renewable Transport Fuel Obligations could be used to encourage the uptake of low-carbon fuels in the maritime sector.

Source: Department for Transport, Maritime 2050: navigating the future, January 2019



1.4 CCC considers that these strategies will bring transport emissions closer to the cost-effective path for reductions, if they lead to further firm and funded policies. In 2016, CCC forecast that government was on track to miss its cost-effective path for transport emission reductions by 50% in 2025, as compared to 2014 levels. Its latest analysis is that the ambitions in the Road to Zero strategy would close this gap to 35%. However, it does not consider that government has developed policies to deliver these ambitions, and on the basis of firm and funded policies alone, the gap to the cost-effective path in 2025 remains close to 50% (Figure 3).

Figure 3Committee on Climate Change 2018 assessment of policy risks to achieving 80% reductionof carbon emissions by 2050 from the transport sector

Millions of tonnes CO2 equivalent Millions of tonnes CO2 equivalent

The Road to Zero Strategy could help reduce carbon emissions by 2025, but more will need to be done to meet theCommittee on Climate Change’s cost-effective path for decarbonisation

CCC’s latest analysis indicates that the high-level intentions of the Road to Zero strategy, if met, could resultin emissions that would fall 35% short of its cost-effective path, compared to 2014 levels

Notes

1 The Committee on Climate Change (CCC) produced this assessment after publication of the Road to Zero.

2 CCC’s cost-effective path represents the emission levels at which the costs of implementing policies equal the carbon costs of the emissions.

3 DECC refers to the Department of Energy & Climate Change.

Source: Committee on Climate Change progress report to Parliament 2016 and Road to Zero response letter

Potential reduction in emission levels high-level intentions from the Road to Zero strategy could reach

Potential reduction in emission levels that would require additional polices to reach (‘Policy gap’)

Potential reduction in emission levels low-risk policies could reach

Potential reduction in emission levels high-risk policies could reach

CCC’s assessment of the cost-effective path to meet the government’s 2050 decarbonisation objective

Projected carbon emissions if no action is taken

Historic emissions

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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

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Baseline emissions(2014)

Emissions to meetCCC’s cost-effective

path in 2025

2015 DECC emissionsprojection for 2025

Emissions with 2018CCC policy gap for 2025

In their 2016 briefing the Environmental Audit Committee pointed out that DECC projections of transport emissions for 2025 would fall almost 50% short of the carbon reductions, from a 2014 baseline, needed to meet CCC’s cost-effective path.

Following the publication of the Road to Zero strategy CCC determined that this gap would close to 35% if the high-level intentions of the strategy were realised.



Figure 3Committee on Climate Change 2018 assessment of policy risks to achieving 80% reductionof carbon emissions by 2050 from the transport sector

Millions of tonnes CO2 equivalent Millions of tonnes CO2 equivalent

The Road to Zero Strategy could help reduce carbon emissions by 2025, but more will need to be done to meet theCommittee on Climate Change’s cost-effective path for decarbonisation

CCC’s latest analysis indicates that the high-level intentions of the Road to Zero strategy, if met, could resultin emissions that would fall 35% short of its cost-effective path, compared to 2014 levels

Notes

1 The Committee on Climate Change (CCC) produced this assessment after publication of the Road to Zero.

2 CCC’s cost-effective path represents the emission levels at which the costs of implementing policies equal the carbon costs of the emissions.

3 DECC refers to the Department of Energy & Climate Change.

Source: Committee on Climate Change progress report to Parliament 2016 and Road to Zero response letter

Potential reduction in emission levels high-level intentions from the Road to Zero strategy could reach

Potential reduction in emission levels that would require additional polices to reach (‘Policy gap’)

Potential reduction in emission levels low-risk policies could reach

Potential reduction in emission levels high-risk policies could reach

CCC’s assessment of the cost-effective path to meet the government’s 2050 decarbonisation objective

Projected carbon emissions if no action is taken

Historic emissions

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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

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Baseline emissions(2014)

Emissions to meetCCC’s cost-effective

path in 2025

2015 DECC emissionsprojection for 2025

Emissions with 2018CCC policy gap for 2025

In their 2016 briefing the Environmental Audit Committee pointed out that DECC projections of transport emissions for 2025 would fall almost 50% short of the carbon reductions, from a 2014 baseline, needed to meet CCC’s cost-effective path.

Following the publication of the Road to Zero strategy CCC determined that this gap would close to 35% if the high-level intentions of the strategy were realised.



1.5 It is possible that CCC’s analysis of the cost-effective path for reductions could change, as it is in the process of reviewing whether the UK should aim for greater greenhouse gas emissions reductions by 2050. DfT is currently awaiting further CCC advice, due this spring, to inform its future approach to transport. In October 2018, the Minister for Climate Change wrote to CCC asking it to review the UK’s long-term targets for carbon emissions. This followed a 2018 report by the Intergovernmental Panel on Climate Change, which found that limiting global temperature rises to 1.5°C is possible but would require rapid and far-reaching changes, with greenhouse gas emissions falling to net zero by 2050. Under the 2015 Paris Agreement the UK, along with other signatories, is committed to limiting global temperature rises to less than 2°C above pre-industrial levels and to “pursue efforts” to limit the temperature increase even further to 1.5°C.

Environmental Audit Committee recommendation on renewable energy targets

Retain the EU’s renewable energy target in UK law and establish a transport sub-target

Government should retain the EU’s renewable energy target in UK law and incorporate the transport sub-target into it. It should also set out how it intends to work with other departments in doing so.

Summary of progress

Although government has not established a separate target in law for renewable energy in transport, it has increased requirements on fuel suppliers through the Renewable Transport Fuel Obligations, which it expects to have a similar effect.


1.6 The EU renewable energy targets derive from the EU Renewable Energy Directive, which came into force in 2009. This requires member states to source a percentage of all energy demand from renewable sources by 2020, with the proportion required varying country to country, and set at 15% for the UK. It also requires member states to source at least 10% of transport fuels from renewable sources by 2020.



1.7 The Renewable Transport Fuel Obligations (RTFO) are the UK’s sole policy instrument for incentivising the uptake of biofuels, and hence a key part of government’s approach to increasing the use of renewable fuels in transport. To meet the RTFO, fuel suppliers that meet certain criteria must show that a percentage of the fuel they supply comes from sustainable and renewable sources or pay a ‘buy out’ fee.4 Under both the EU Directive and the RTFO ‘advanced biofuels’ such as those derived from waste can be double-counted towards the renewable energy transport sub-target.5 Double-counting incentivises biofuels that provide environmental advantages, as crop-derived biofuels can displace farming activity for food.

1.8 The overall renewable energy target has been transposed to domestic legislation through the Promotion of the Use of Energy from Renewable Sources Regulations 2011. The transport sub-target is not set directly in UK law, but government expects that changes it introduced in 2017 to the RTFO will ensure that renewable fuel in transport increases by 2020 in line with the requirements of the EU sub-target. In 2017, it amended the RTFO to increase the proportion of renewable fuels required (the obligation level). The obligation level had previously been held steady at 4.75% since 2013. It now increases each year until 2032, with a rapid initial increase to 7.25% for 2018 (Figure 4 overleaf) and a more gradual increase after 2020. If companies increase their use of renewable fuels accordingly, DfT predicts that biofuels will account for 5.3% of transport fuels by energy in 2020, and 9.2% after double-counting. It estimates that renewable electricity would account for a further 0.4% of transport energy demand by 2020, which would bring the UK’s total renewable transport fuel use to 10.3% in 2020 under accounting rules of the EU Directive.6

1.9 Fuel suppliers can meet some or all of their obligations by paying a ‘buy out’ free rather than by supplying renewable fuels. However, no fuel supplier has taken up this buy-out option in the past eight years and total renewable fuel use in the sector has exceeded the obligation level in every year. The latest data available (covering 2018 up to October) do not highlight any major concern over whether this will continue as the obligations increase. During 2018, the uptake of biofuels increased 30% on the previous year, to 7.1% with double-counting. Although this is below the 7.25% obligation, the shortfall can be made up in the final quarter of the year as the RTFO covers the year as a whole (Figure 5 on page 19).

4 Companies that own and supply more than 450,000 litres of fuel for any road transport or non-road mobile machinery are obligated under the RTFO.

5 The sustainability criteria for the RTFO are the same as for the Renewable Energy Directive: Fuels must achieve at least 60% emissions savings and may not be made from raw materials obtained from land with high biodiversity value or from land with high carbon stock.

6 Renewable electricity for rail and road transport is counted 2.5 and 5 times respectively, resulting in a 1.1% contribution to the Renewable Energy Directive target.



1.10 In 2018, the European Parliament approved an update to the EU Renewable Energy Directive that set a new sub-target for transport fuel from renewable sources of 14% by 2030. DfT considers that the update to the RTFO is already broadly in line with the new target. It estimates that biofuel will account for 12% of transport energy demand in 2030, after double-counting, leaving renewable electricity use in transport to contribute the remaining 2% by 2030.7

7 The National Audit Office has not reviewed the Department’s projections for future uptake of biofuels or renewable electricity.

0

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Figure 4Historic proportion of biofuels as a percentage of transport fuel since 2008

Proportion of biofuels by volume (%)

The Renewable Transport Fuel Obligations (RTFO) has been 4.75% since 2013, until 2018 when it increased to 7.25%.With double-counting, it has been met in all previous years

Notes

1 To encourage the use of fuels that represent environmental advantages, some biofuels, such as waste-based biofuels and residues, are double-counted and issued with double the number of renewable transport fuel certificates per litre. In 2018 around 65% of biofuel supply was eligible for double-counting.

2 The RTFO sets a percentage by volume of biofuel a fuel supplier must demonstrate they have met. The EU Renewable Energy Directive sets a 10% target by energy that member states much demonstrate has been met by 2020. As different fuels have different calorific values these two measures are not directly equivalent.

3 In 2018 the reporting changed from financial year to calendar year, meaning this year will have a shorter reporting period.

4 Double-counting feedstock data was not published for the first two years of the scheme.

Source: National Audit Office analysis of Department for Transport biofuel statistic data

Biofuels

With double counting

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19Q1 & 2

Obligation



1.11 Although multiple-counting of renewable energy is allowed to meet the transport sub-target, this does not apply to the overall renewable energy target, which includes transport, electricity generation and heating. Because the actual amount of renewable energy used in transport will be less than 10%, over-performance against the separate targets for power generation and/or heating will be required for the UK to meet its commitment for 15% of energy to be renewable by 2020. It is important for DfT and the Department for Business, Energy & Industrial Strategy to work closely together to assess how performance in the transport sector will affect the requirements from power generation.

4

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Figure 5Future changes to the Renewable Transport Fuel Obligations level

Proportion of biofuels by volume (%)

Note

1 The Renewable Transport Fuel Obligations set a percentage by volume of biofuel a fuel supplier must demonstrate they have met. The EU Renewable Energy Directive sets a 10% target by energy that member states much demonstrate has been met by 2020, 14% by 2030. As different fuels have different calorific values these two measures are not directly equivalent.

Source: Renewable Transport Fuel Obligations

From 2017 the proportion of biofuels fuel suppliers are required to supply increases year-on-year until 2032.The increase begins rapidly before becoming more gradual after 2020


20 Part Two Department for Transport sustainability update

Part Two

Ultra-low emission vehicles

Environmental Audit Committee recommendations on promoting Ultra-Low Emission Vehicles

Be more specific about a market share target for Ultra-Low Emission Vehicles (ULEVs) in 2020

The Department for Transport’s (DfT’s) projection of (ULEV) market share in 2020 between 3% and 7% is too vague; it should identify the figure it intends to work to.

Clarify the approach to incentivising the uptake of ULEVs

DfT should produce a timetable setting out how and when it intends to incentivise further take-up of ULEVs and what targets its commitments are intended to meet

DfT should set out its proposals for:

• changing light van licensing conditions to take account of the additional weight of a battery and/or hydrogen tank;

• supporting ULEV fleet procurement by underwriting risk or guaranteeing buy-back;

• helping workplaces invest in charging points; and

• introducing a national grant scheme for ULEV taxis beyond 2020 to reduce their price.

Government should set out a timetable for communicating its fiscal proposals to increase uptake and maintain revenues to the Exchequer, including measures relating to company car tax and vehicle exercise duty.


Department for Transport sustainability update Part Two 21


2.1 Since the Committee’s 2016 report there have been two main developments in government’s approach to ULEVs. The first is publication of the 2018 Road to Zero strategy, which outlined government’s ambitions and plans for supporting the transition to zero emission road transport over the long term. This strategy incorporated new targets for 2030 and 2040, alongside a series of new and existing measures to increase ULEV take-up (Figure 6 overleaf). Government reports that in total the measures in the strategy sum to nearly £1.5 billion of investment up to March 2021.

2.2 The second key development has been the 2018 Automated and Electric Vehicles Act, which gave government new powers to improve the provision of electric vehicle infrastructure. These proposals include powers to regulate technical standards of infrastructure to ensure easy compatibility with vehicles, to ensure availability of data on charge point locations and availability, and to require provision at motorway service areas and large fuel retailers.

Summary of progress

The Department for Transport (DfT) has not set a more specifi c market share target for Ultra-Low Emission Vehicles (ULEVs) for 2020. Its modelling indicates that ULEVs could account for around 5.7% of new car registrations in 2020 if current grants are maintained at the same rate, and around 3.7% if grants were removed for the full year of 2020. This would mean take-up would fall well short of the 9% market share of new vehicles that the Committee on Climate Change (CCC) recommends for a cost-effective path to reducing transport carbon emissions.

In 2018 government published a new strategy for ULEVs, the ‘Road to Zero’, which included ambitions for the medium- to long-term, of at least 50% ULEV market share by 2030 and to end the sale of conventional cars by 2040. Government has also set out proposals for incentivising ULEVs that cover some of the issues recommended by the CCC. DfT and HM Treasury have not set out how they will develop fi scal proposals for ULEVs beyond 2020, to increase uptake while maintaining revenues for the Exchequer.



2.3 DfT has not, however, set clearer or more ambitious expectations for the ULEV market share in 2020 in line with the Environmental Audit Committee’s (the Committee’s) recommendation, and told us that it is still working to a range of 3% to 7% of new cars. DfT does not publish its ULEV market share projections publicly, but told us that its modelling indicates that ULEVs could account for around 5.7% of new car registrations in 2020 if current grants are maintained at the same rate, and around 3.7% if grants were removed for the full year of 2020. There is inherent uncertainty around these projections as they are based on a model of consumer choices that involves assumptions about factors such as the wider growth of the economy, developments in battery technology and ULEV supply. DfT does not have detailed projections for the 2020 ULEV market share of other vehicles such as vans.

Figure 6The Department for Transport’s Road to Zero strategy

Purpose of the strategy

To put the UK at the forefront of the design and manufacturing of zero emission vehicles.

For all new cars and vans to be effectively zero emission by 2040 and for almost all cars and vans to be zero emission by 2050.

The significance of decarbonising road transport

The transport sector continues to be the largest in terms of emissions. Cars and vans are the most significant source of greenhouse emissions within this, making up 70% of transport emissions in 2016, with emissions from heavy goods vehicles, rail, domestic aviation and shipping making up almost all of the remaining 30%.

If the ambitions in the plan are realised then by 2050, ‘exhaust pipe emissions’ from cars and vans will near zero in the UK.

Proposals

The strategy includes 46 new and existing proposals that aim to drive the shift towards almost all vehicles being zero emission by 2050.

• Reaffirming the commitment to end the sale of conventional cars and vans by 2040;

• for at least 50% of new cars and 40% of van sales to be Ultra-Low Emission Vehicles (ULEVs) by 2030;

• for 25% of the central government car fleet to be ULEV by 2022, increasing to 100% by 2030;

• for all new houses, where appropriate, to have a charge point available;

• launching a Go Ultra Low campaign to raise consumer awareness for ULEVs; and

• launching a £400 million Charging Infrastructure Investment Fund.

Source: Department for Transport, The Road to Zero: Next steps towards cleaner road transport and delivering our Industrial Strategy, July 2018



2.4 If DfT’s projections are met ULEV market share would fall well short of the 9% CCC has advised is needed to stay on a cost-effective path for reducing carbon emissions from transport (Figure 7 overleaf). DfT told us that it considers that its projections for 2020 take-up are consistent with its long-term ambitions for ULEVs. It considers that other factors are also important measures of progress in the short term, such as the provision of charging infrastructure, and the development of ‘smart’ solutions to increased loading on the national grid, and that ULEV market share can accelerate once these are in place.8

2.5 The current level of take-up also means that the 2030 target for at least 50% of new cars to be ULEV represents a significant increase. Government plans to review the feasibility of the 2030 target by 2025. This may, however, be too late for government to intervene effectively if uptake is slower than expected, and without interim targets it will be difficult to hold DfT to account for its performance before 2030.

2.6 In its February 2018 report on electric vehicles the Business, Energy and Industrial Strategy Committee welcomed the Road to Zero strategy, but argued it did not go far enough in setting a clear direction for the decarbonisation of the vehicle sector. It criticised DfT’s target to end the sale of conventional cars and vans by 2040 as “vague and insufficiently ambitious to deliver on its long-term aims”, and recommended that it bring forward a clear, precise target for new sales of cars and vans to be truly zero emissions by 2032.

2.7 Since the Committee’s 2016 report, DfT has announced proposals that address three of its specific recommendations:

• In 2018 it amended legislation to increase the weight limit on category B licences to 4.25 tonnes for electric vehicles.

• It increased the grant level of the Workplace Charging Scheme from £300 to 75% of the purchase and installation costs, capped at £500 per socket.

• The Office for Low Emission Vehicles (OLEV) launched a £50 million grant for plug-in taxis. This grant reduces the cost of ULEVs by £7,500 for licensed taxi drivers. A separate investment of at least £6 million for local authorities is also being delivered to fund dedicated charge points for electric taxis. These grants will be in place until at least 2020.

8 “Smart” chargers help balance the demands on the grid by charging at off peak times when grid demand is low.



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2.8 One of the Commitee’s specific recommendations has not been directly addressed yet, but will be in the coming year:

• Changes that support ULEV fleet procurement through underwriting risk or guaranteeing buy-back have not been made. However, from April 2020 the company car tax rate for ULEVs will drop from 16% to 2%. DfT told us that this should provide a significant incentive for their uptake in fleets.

2.9 The Road to Zero committed DfT to continuing grants for the purchase of new ULEVs until at least 2020. Beyond this, it says that government will continue to ensure the tax system incentivises the purchase of the cleanest vehicles. DfT has already started to withdraw some grants. From 2018 vehicles with a zero-emission range less than 70 miles are no longer eligible for the plug-in car grant and the grant was reduced by 22% for those with a greater range. DfT told us that this does not appear to have stalled the uptake of ULEVs. HM Treasury told us that government is considering how the tax system will need to adapt as technology develops but did not make clear how government will manage the transition from conventional to ULEV vehicles in terms of tax revenue streams, although it will be considered as part of the 2019 Spending Review. HM Treasury sits on the OLEV programme board, which meets quarterly, and discussions are held covering policy developments and progress.


26 Part Three Department for Transport sustainability update

Part Three

Air quality and the Volkswagen recall programme

Environmental Audit Committee recommendations on air quality targets

Retain EU air quality targets set out in UK law after EU Exit

The government should retain in UK law and continue to work towards the air quality targets in the Ambient Air Quality Directive after the UK leaves the EU.


3.1 The air quality targets and other obligations in the Ambient Air Quality Directive were transposed into domestic law in 2010. In England this was through the Air Quality Standards Regulations 2010 and there is equivalent legislation in the devolved administrations. The government has laid in Parliament two EU Exit statutory instruments that specifically concern air quality legislation. The Joint Air Quality Unit told us that these instruments affect the Air Quality Standards Regulations 2010, but do not change any of the substantive elements of the regulations. Instead, the instruments make technical amendments that are needed because of the UK leaving the European Union (for example, updating references that would no longer be valid when the UK is not a member of the EU). The devolved administrations will pass their own statutory instruments to amend the legislation that applies in their area.

3.2 The government has made a broader commitment that leaving the EU will not lead to any weakening of environmental protections. To support this, the Department for Environment, Food & Rural Affairs (Defra) has published draft clauses of the Environment Bill which would establish a new environmental watchdog, the Office for Environmental Protection, to hold public authorities to account on their compliance with environmental law after the UK leaves the EU.

Summary of progress

The air quality targets from the Ambient Air Quality Directive were transposed into UK law in 2010 and will remain binding on the government after EU Exit. Minor technical amendments are being passed to ensure that the regulations are operable after the UK leaves the EU.


Department for Transport sustainability update Part Three 27

Environmental Audit Committee recommendations on valuing air quality issues in government appraisal

Work with other Departments to ensure that air quality is given proper weight in project appraisal.

The Department for Transport (DfT) should work with other Departments, especially HM Treasury, to ensure that the value of air quality is properly reflected in the Transport Analysis Guidance.


3.3 In 2017, the government reconvened an interdepartmental group responsible for economic analysis of air quality policy. Over the course of 2017 and 2018, this group considered how to improve the way that project appraisals account for the health impacts of air pollution from nitrogen dioxide and particulate matter. It drew on research and recommendations from government’s independent expert advisers on air pollution and health (the Committee on the Medical Effects of Air Pollution, COMEAP) and Public Health England. One of the more complex aspects to its considerations was how to account for the long-term health effects of nitrogen dioxide. Isolating the health impacts of nitrogen dioxide is difficult, as it tends to be found in combination with other airborne pollutants. Defra had written to COMEAP to ask for advice on this issue in May 2015, but the complexity of the task meant that COMEAP was only able to publish its final report in August 2018, which itself included dissenting opinions from three members of the COMEAP.

Summary of progress

Since 2016, the government has acted on the Environmental Audit Committee’s recommendation to ensure that Transport Analysis Guidance better refl ects the true cost of air pollution. In January 2019, the Department for Environment, Food & Rural Affairs (Defra) produced updated damage costs valuing the health effects of air pollution based on new recommendations from the Committee on the Medical Effects of Air Pollution (COMEAP) and Public Health England. These will be refl ected in DfT guidance from May 2019.



3.4 The interdepartmental group produced draft damage cost figures in May 2018, and Defra published final figures for use in government appraisal in January 2019. The new figures halved the damage cost of nitrogen dioxide, but more than tripled the damage cost of fine particulate matter.9 These new figures reflected updated dispersion modelling, further research on the health effects of nitrogen dioxide and a wider range of health impacts. For example, they accounted for the quality of life impacts of coronary heart disease, lung cancer, stroke and asthma. DfT told us that it will update its Transport Analysis Guidance accordingly and plans to issue an update notice in March or April 2019. This would allow the new figures to be used from May 2019.

Environmental Audit Committee recommendations on air quality models

Conclude whether current air quality models are still valid and update air quality plans if necessary.

The government should press the European Research into Mobile Emissions Sources group to conclude whether the current air quality models are accurate in light of the Volkswagen scandal. The government should clearly state whether, based on these conclusions, air quality plans need revising and, if they do, when this will be done.


3.5 Current air quality models use COPERT, a software programme used by the European Environment Agency, that can be used to calculate emissions from the road transport sector. A new version of the software (COPERT 5) was launched in September 2016. It reflected the most current research from the European Research on Mobile Emissions Sources group and EU member states (including the UK), which demonstrated that actual emissions of oxides of nitrogen from Euro 5 and Euro 6 diesel engines were significantly higher than laboratory tests had predicted.

9 2019 damage costs for nitrogen dioxide is £10,699 per tonne, compared with the previous 2015 cost of £25,252 per tonne. but significantly increased the damage cost of fine particulate matter to £203,331 per tonne (the 2015 cost was £58,125 per tonne).

Summary of progress

Since 2016, several bodies, including the Department for Transport (DfT), have conducted research into road vehicles’ real-world emissions, which has been used to create new emission factors for oxides of nitrogen for use in air quality models. These new factors were used in the air quality modelling that informed DfT’s 2017 Air Quality Plan. A High Court ruling in February 2018 concluded that the modelling showed no clear “legal error or irrationality”.



3.6 The government published a new air quality plan, UK plan for tackling roadside nitrogen dioxide concentrations, in July 2017 which used the updated COPERT 5 emission factors. As had happened with previous air quality plans, the government was challenged in court over whether its latest plan was sufficient to address the failure to meet nitrogen dioxide targets set in the Ambient Air Quality Directive. The judge concluded in February 2018 that, while the government’s new policy was unlawful, the modelling it was based on showed no clear “legal error or irrationality”. This contrasted with the previous court ruling in November 2016 (when government plans relied on an earlier version of COPERT) that government plans relied on unrealistic and over-optimistic pollution modelling.

Environmental Audit Committee recommendation on funding for local authorities

Provide local authorities with funding to address air quality issues

Dedicated funding should be made available to allow local authorities to tackle air quality issues.

3.7 As part of its air quality plans, the government has allocated £495 million of funding to help local authorities meet nitrogen dioxide targets as quickly as possible and mitigate the economic effects. This comprises a £275 million Implementation Fund to support local authorities to prepare plans and deliver targeted action to improve air quality, and a further £220 million Clean Air Fund to support local authorities to mitigate the effects of these measures on groups and business.

3.8 When launching the funds, the government considered that this would be sufficient for all local authorities to comply with air quality targets. However, since the funding was announced a further 33 local authorities have been required to take steps to address air quality issues. There have been three ‘waves’ to the evolution of government’s air quality requirements for local authorities. The 2015 Air Quality Plan announced that five cities would introduce Clean Air Zones to meet air quality targets. An updated air quality plan in 2017 identified a further 23 local authorities (which have formed 11 groups to take action on air quality) that would need to introduce measures to comply with air quality targets as soon as possible. Following a court judgment in February 2018 on the legality of the 2017 Air Quality Plan, the government directed 33 further local authorities to develop feasibility studies for tackling roadside nitrogen dioxide concentrations (Figure 8 overleaf).

Summary of progress

The Department for Transport (DfT) has made £495 million of dedicated funding available for local authorities to enact measures to meet clean air targets as quickly as possible.



Figure 8Progress of local authority bids for funding through the Clean Air Fund and Implementation Fund

The Department for Transport (DfT) has committed less funding than anticipated to the first wave of local authorities, but a significant number of authorities in the third wave have yet to decide how best to tackle air quality issues

Number of local authorities

Delivery assessment Funding awarded to date Early measures support

First wave – 5 authorities

• 2 plans approved;

• 1 plan conditionally approved; and

• 2 final business cases still outstanding.

• £24 million from the Clean Air Fund; and

• around £7 million from the Implementation Fund.

• £11.3 million to retrofit 897 buses; and

• £9.9 million for other measures

Second wave – 11 authorities

• 8 authorities provided Outline Business Cases by the 31 December 2018 deadline which are under review; and

• 3 authorities missed the deadline and received ministerial letters.

• £14.4 million to retrofit 716 buses; and

• £16.0 million for other measures.

Third wave – 33 authorities

• 3 authorities directed to implement measures and submit local plans;

• 7 authorities directed to implement measures;

• 5 authorities directed to produce a local plan by 31 January 2019; and

• no further action was required from 18 authorities.

• £9.1 million issued to the 10 authorities directed to implement measures.

Notes

1 First wave local authorities: Nottingham, Leeds, Birmingham, Derby and Southampton.

2 Second wave local authorities: Middlesbrough, New Forest, Bath & NE Somerset, Blackwater Valley, Fareham, Coventry, Sheffi eld & Rotherham, Greater Manchester, Basildon & Rochford, Bristol; and Tyneside.

3 Third wave local authorities: Portsmouth, Newcastle under Lyme, Leicester, Basingstoke & Deane, Dudley, Reading, Sandwell, Solihull, South Gloucestershire, Wolverhampton, Bolsover, Bradford, Broxbourne, Liverpool, Stoke on Trent, Blaby, Oldham, Oxford, Poole, Walsall, Ashfi eld, Bournemouth, Burnley, Calderdale, Cheltenham, Plymouth, South Tyneside, Southend-on-Sea, Sunderland, Wakefi eld, Kirklees, Peterborough and Sefton.

4 Of the Implementation Fund, £40 million was made available for immediate use by local authorities so that they could take steps to address air quality before their fi nal plans were approved. The allocation of this money is shown in the column ‘early measures support’ and is separate from any Implementation Fund allocations shown under ‘Funding awarded to date’.

Source: Department for Transport



3.9 DfT expected that the bulk of the funding to local authorities would be spent in 2018-19 and 2019-20 (Figure 10 on page 33), but take-up from local authorities has been slower than expected. In February 2019 DfT told us that only £95.6 million of the funding has been allocated, compared with its forecast for a cumulative total of £216.6 million to have been allocated by the end of March 2019 (Figure 9). As we were finalising this memorandum DfT informed us that a total of £216 million of funding to local authorities had now been provisionally awarded but was only able to provide limited supporting detail of this. Establishing clean air zones is likely to be the most time-consuming measure and DfT currently expects any such zones proposed by the first wave of authorities to be in place by January 2020 and those from the second wave of authorities to be in place by January 2021.

Environmental Audit Committee recommendations on the Volkswagen emissions scandal

Set a clear timetable for the Volkswagen recall

The government should set a clear vehicle recall timeline for Volkswagen to stick to, along with a set of sanctions should Volkswagen fail to do so.

Measure the impact of defeat devices on emissions tests and consider legal action against Volkswagen

The Vehicle Certification Agency should measure the precise contribution that Volkswagen defeat devices made to meeting the Euro 5 standards and conclude whether there are grounds for legal action against Volkswagen.

Figure 9Funding for the Department for Transport’s (DfT’s) plans to meet nitrogen dioxide air quality targets

DfT expects that most of the expenditure to meet nitrogen dioxide air quality targets will fall in 2018-19 and 2019-20

2016-17(£m)

2017-18(£m)

2018-19(£m)

2019-20(£m)

2020-21(£m)

Implementation Fund 6 31.3 84.3 101.3 52

Clean Air Fund 95 110 15

Total 6 31.3 179.3 211.3 67

Source: Department for Transport




3.10 In September 2015, the American Environmental Protection Agency announced that Volkswagen Group had contravened the Clean Air Act by fitting software that could cheat government emissions tests. These ‘defeat devices’ detected when the engine was being put through a statutory laboratory emissions test and altered the engine’s behaviour so that it would meet the emissions limits. It soon became clear that Volkswagen Group had fitted defeat devices to a large number of vehicles across the globe, including 1.2 million vehicles in the UK. Under current legislation, the government has no powers to compel manufacturers to issue a recall on environmental grounds. In the Clean Air strategy, the government announced that it would introduce new legislation that would enable the Transport Secretary to compel manufacturers to recall vehicles and non-road mobile machinery for any failures in their emissions control system. However, in the current case it would not have made a difference as Volkswagen Group voluntarily announced a full recall programme covering all affected vehicles.

3.11 Volkswagen Group had initially hoped to fix all 1.2 million affected vehicles by the end of 2016, but were unable to do this. By February 2019, Volkswagen had fixed just under 75% of the affected vehicles in the UK, with nearly 300,000 vehicles still to go (Figure 10). A major obstacle to the recall is that neither Volkswagen nor the government has any way to compel owners to get their vehicles fixed. DfT told us that although Volkswagen Group can identify the owners of affected vehicles using the Driver and Vehicle Licensing Agency (DVLA) database and has contacted them on several occasions to arrange for the vehicles to be fixed, it is ultimately down to the owners to make these arrangements. DfT told us that this was the primary cause for progress slowing over time as the more engaged vehicle owners have already had the fix applied.

Summary of progress

Volkswagen Group has fi xed around three-quarters of the 1.2 million vehicles in the UK fi tted with defeat devices, but progress on the recall programme has slowed considerably. The government considers that under current legislation, it has no powers to sanction Volkswagen Group for any failures to complete the recall programme nor any power to compel the remaining vehicle owners to get their vehicles fi xed.

Government research, published in April 2016, clearly showed that defeat devices made a signifi cant contribution to Volkswagen vehicles meeting the Euro 5 standards. However, the legal advice government received was that it had no grounds for action against Volkswagen Group as a whole and only had grounds for action against Skoda. The government’s legal advisers were sceptical that such a prosecution would succeed and that any attempt to do so could prejudice the ongoing German investigation into the matter. As matters currently stand, any UK legal action is dependent upon the outcome of the German investigation.



3.12 Another factor that has delayed the recall programme is the UK government’s withholding of approval for technical fixes for certain Skoda models. The fixes for the other brands in the Volkswagen Group were approved in other countries where the vehicles had originally been certified (Germany, Luxembourg and Spain), but the Skoda vehicles had been certified in the UK. In the summer of 2016, there was significant press coverage raising concerns that the technical fixes developed by Volkswagen Group adversely affected the durability of the engines. In response, DfT withheld approval for the technical fixes for the remaining Skoda models until they received evidence and guarantees from Volkswagen Group that the fixes would not adversely affect vehicle owners. Volkswagen Group agreed to a series of trust-building measures, which guaranteed, under certain conditions, 11 parts of the engine and exhaust system of vehicles for two years after the fix had been applied. As a result of the government withholding approval until these guarantees were received, none of these Skoda vehicles could be fixed between August 2016 and May 2017.

0

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1,000

2016

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2017 2018 2019

Figure 10Progress of the Volkswagen recall programme

Vehicles fixed (000)

Source: Volkswagen Group

Progress on recalls has slowed considerably, with around a quarter of affected vehicles (c. 300,000) still waiting to be fixed



3.13 Governments in some other countries have legal powers to compel owners to get affected vehicles fixed. DfT told us that among EU countries the governments of Austria, Denmark, Finland, France, Germany, the Netherlands, Portugal and Slovenia all have legislative powers to ensure that affected vehicles are fixed. DfT told us that is currently considering proposals that would give it similar powers to ensure that all vehicles affected by ‘environmental’ issues would be fixed. One of the main proposals under consideration is that any affected vehicles which have not been fixed would fail an MOT. This has been highlighted previously by the Transport Select Committee. Such a measure would quickly clear the backlog of vehicles waiting to be fixed, but DfT is aware that there are challenges to address, including the need for real-time data-sharing between manufacturers, the Driver and Vehicle Standards Agency (DVSA) and MOT centres to ensure that mistakes are avoided.

3.14 In early 2016, DfT undertook a programme of testing to assess how the Volkswagen defeat devices had affected the laboratory emissions test results. Quantifying how much the defeat devices affected the laboratory tests was difficult as it was not possible to simply remove the software that detected the statutory emissions testing cycle. Instead, DfT was able to bypass the defeat device by running the laboratory test in a different order. The results, which were published in April 2016, showed that the defeat device improved the performance of Volkswagen vehicles in laboratory emissions tests by several orders of magnitude.10 Running the tests in a different order meant that the results were not a perfect comparison of how the engines would have performed with and without the defeat device software, so DfT did not precisely quantify the results.

3.15 DfT’s research also showed that all diesel vehicles (not just ones from Volkswagen Group) which had been certified as meeting the Euro 5 and Euro 6 emissions standards had much higher emissions under real-world driving conditions than the laboratory tests had predicted. The road tests for both Euro 5 and Euro 6 compliant vehicles showed that, on average, the vehicles’ nitrogen dioxide emissions were more than six times higher than the legal limits and that Volkswagen Group vehicles were not the worst in terms of emissions. As a result of this and similar research conducted elsewhere, the EU introduced the Real Driving Emissions test in September 2017 to ensure that new cars’ actual emissions did not deviate so significantly from the laboratory tests. DfT conducted track testing to assess the impact of the technical fixes being applied to Volkswagen Group vehicles, and found that the fix reduced nitrogen dioxide emissions by 35% to 40%.

10 See Figure 5-1 in Department for Transport, Vehicle Emissions Testing Programme, April 2016. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/552439/vehicle-emissions-testing-programme-print.pdf



3.16 In the wake of the scandal, DfT sought legal advice as to whether it could prosecute Volkswagen Group. The legal advice, a summary of which we have seen, concluded that there were no grounds for action against Volkswagen Group as a whole, but that it would be possible for action to be taken against Skoda as its vehicles had been approved in the UK. However, the advisers argued that the prospects of a successful prosecution were slim. In addition, an investigation would be complex and resource-intensive given that the vast majority of the evidence of wrongdoing is likely to be overseas. There was also concern that an unsuccessful UK prosecution will impact negatively on prosecutions from other EU member states (primarily Germany) as a result of the double jeopardy principle. As a result, any UK action is dependent upon the outcome of an ongoing German investigation into the matter. While there have been ad hoc, informal meetings with the German government, the UK government does not receive formal updates on how the investigation is progressing. In February 2019, the Minister for Transport informed the Transport Select Committee that he had received assurances from the German government that its investigation would be “comprehensive”, but had received no indication of when the investigation was likely to complete.


36 Part Four Department for Transport sustainability update

Part Four

Rail Sector

Environmental Audit Committee recommendation on Network Rail

The Department for Transport (DfT) should include new carbon emissions reductions targets in the updated rail sustainability strategy, which should show how they have been arrived at and how progress against them will be measured.

Summary of progress

The Department for Transport (DfT) has not set any new sector-wide carbon reduction targets for rail. The sector is not on track to meet its existing carbon effi ciency targets, which come to an end in March 2019. In February 2018, the Minister for Rail challenged the industry to remove all diesel-only trains from the network by 2040 and to provide a vision for how it will decarbonise. The industry has responded by establishing a ‘decarbonisation taskforce’, which has committed to include “stretching aspirations” in its fi nal report, due to be published in spring 2019.


4.1 The rail sector in England and Wales continues to have carbon efficiency targets, which are to reduce carbon emissions per passenger kilometre by 37% by March 2019 (from a 2019-10 baseline), and to reduce carbon emissions per net freight tonne kilometre by 11% over the same period. The latest available data (for 2017–2018) shows, however, that the sector is not on track to meet these targets. It is making progress on the carbon efficiency of passenger rail, which improved by 26% in 2017-18 compared with 2009-10. Freight carbon efficiency, however, declined by 20% over the same period.


Department for Transport sustainability update Part Four 37

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Figure 11Carbon efficiency in the rail sector, 2011-12 to 2017-18

Carbon dioxide (grams)

Emissions per passenger km

Emissions per freight tonne km

2018-19 target for passenger rail

2018-19 target for freight

Note

1 Freight accounted for 18% of rail transport emissions in 2017-18.

Source: Office of Rail and Road statistics

The rail industry has improved carbon efficiency for passenger rail travel, but is on course to miss its targets for freight



4.2 These carbon efficiency targets come to an end in March 2019 and it is not yet clear whether they will be replaced:

• The industry set the targets in response to the ‘High Level Output Specification’ (HLOS), which DfT issues every five years to tell Network Rail what is expected of it. The 2012 HLOS included an instruction to the sector to “set itself carbon and energy efficiency objectives, develop indicators to measure its performance against these, and publish this information regularly”.

• However, in the next HLOS, published in 2017, DfT removed the section on environmental performance as part of broader changes to the document. DfT’s expectations for sustainability in the rail sector are now communicated through July 2017 guidance issued to the Office of Rail and Road (ORR), which is responsible for monitoring Network Rail’s performance against the HLOS. This guidance states that “the Secretary of State wishes ORR to have regard to the industry’s Sustainable Development Principles. In particular, he wishes ORR to monitor and benchmark industry progress against and capability to deliver those Principles”. One of the principles covers carbon emissions, setting an ambition to “achieve long-term reductions in carbon emissions through improved energy efficiency, new power sources and modal shift”, although it does not specify quantitative targets or reporting arrangements.

4.3 In its 2016 report, the Environmental Audit Committee was concerned that the rail sector’s carbon efficiency targets were of limited use as they could be met solely by increasing passenger numbers or freight tonnage, which would not reduce total carbon emissions from the sector. Sector-specific carbon reduction targets are not required under the Climate Change Act, and DfT told us that it has not set an overall carbon reduction target for the rail sector because it wants to encourage ‘modal shift’ towards rail. The rail sector is seen as more carbon-efficient than many other forms of transport, so diverting carriage from other sectors, while leading to an increase in rail carbon emissions, may reduce total transport carbon emissions. DfT does not, however, currently set targets relating to the level of modal shift it expects to see.

4.4 In February 2018, the Minister for Rail challenged the industry to remove all diesel-only trains from the network by 2040 and to provide a vision for how it will decarbonise. The industry established a ‘decarbonisation taskforce’, with representatives from across the rail sector. This taskforce published its initial report in January 2019 setting out what it sees as the best strategy for decarbonisation: electrification where appropriate and development of other power sources such as bi-mode, hydrogen, and battery.

4.5 In terms of carbon targets, the taskforce recognised that decarbonisation efforts will need to be supported by “consistent, reliable and robust carbon performance data collection, analysis and reporting back into the industry”. It argued that monitoring and reporting will need to be sufficiently granular to highlight good and bad performance, and drive rigorous carbon management programmes at the operational level. The taskforce committed to include “stretching aspirations” for 2040 in its final report, which it expects to publish in spring 2019.


Department for Transport sustainability update Part Four 39

4.6 DfT is also promoting decarbonisation through obligations placed on franchises. For example, in its June 2018 invitation to tender for the East Midlands franchise, DfT set out a requirement for the franchisee to deliver six stations that have zero operational carbon emissions and the franchise agreement with South Western Railway included targets for reducing traction and non-traction carbon dioxide emissions.

4.7 At the time of the Environmental Audit Committee’s 2016 report, DfT had expected Network Rail to publish a new sustainability strategy by the end of 2016-17, which would include new targets. Network Rail published an Energy & Carbon Strategy 2016–2019 in November 2016, which did not contain any new targets but provided more detail on how it planned to meet its carbon reduction targets for control Period 5. For Control Period 6, which will run from April 2019 to March 2024, Network Rail has set targets to reduce its operational energy use by 18% and its own carbon emissions by 25%.

Environmental Audit Committee recommendation on Network Rail

Include Network Rail in the Greening Government Commitments

The government should include Network Rail in the list of departmental bodies that must report against the Greening Government Commitments

Summary of progress

Network Rail has not been included in the list of departmental bodies expected to report against the Greening Government Commitments. Its public reporting falls well short of the requirements under those commitments. After we shared this memorandum in draft form with the Department for Transport (DfT), it informed us that Network Rail and the Rail Minister have agreed that Network Rail will be included in the Greening Government Commitments from 2020.


4.8 Network Rail is still not included in the list of bodies expected to report against the Greening Government Commitments. In 2016, DfT told the Environmental Audit Committee it expected, after concluding discussions with both Network Rail and the Department for Environment, Food & Rural Affairs, to decide that year whether Network Rail should be included in the scope of those commitments. DfT told us discussions had recently been reopened. In early February they met with Network Rail’s sustainability team and the Greening Government Commitments team in Defra and have had less formal follow-up discussions. After we shared this memorandum in draft form with DfT, it informed us that Network Rail and the Rail Minister have agreed that Network Rail will be included in the Greening Government Commitments from 2020.



4.9 Network Rail’s Sustainable Development Strategy 2013 to 2024 recognised that people were not being held to account on performance and that Network Rail’s performance is behind its peers and supplier base. It committed Network Rail to improve over Control Periods 5 and 6 and includes targets for carbon emissions, waste and zero biodiversity impact for major infrastructure projects. Its 2017-18 Annual Report and Accounts reports performance against targets for carbon and waste to landfill reduction. The report also has brief commentaries for energy use, biodiversity, weather resilience and climate change adaptation. This represents a slight improvement on environmental performance reporting for 2014-15, the last annual report and accounts available prior to the Environmental Audit Committee’s report in 2016. However, it continues to fall well short of the reporting, target setting, and performance monitoring that would be required under the Greening Government Commitments (Figure 12). Network Rail is responsible to the ORR for its carbon emissions and waste but is otherwise not held accountable for its environmental performance.

Figure 12Network Rail environmental reporting compared to requirements under GreeningGovernment Commitments

Network Rail falls short of the reporting, target setting and performance monitoring that would be required under the Greening Government Commitments

Target 2015-16Performance

2016-17Performance

2017-18Performance

Carbon dioxide emissions Reduce emissions by 11.2% byMarch 2019

6.4% 12% 17.5%

Domestic flights Not reported Not reported Not reported

Waste diverted from landfill Divert 95% of all waste produced

from landfill

Not reported 92% 94%

Paper used Not reported Not reported Not reported

Water consumed Not reported Not reported Not reported

Procurement (including compliance with Government Buying Standards)

Not reported Not reported Not reported

Transparency Annual report meets four of six Greening Government criteria

Annual report meets one of six Greening Government criteria

Annual report meets four of six Greening Government criteria

Source: Network Rail Annual Report and Accounts (2015-16 to 2017-18) and Annual Returns (2016–2018)


Department for Transport sustainability update Part Five 41

Part Five

Sustainability reporting

Environmental Audit Committee recommendations on setting targets and reporting progress

Communicate more SMART objectives for sustainable transport

The Department for Transport (DfT) should communicate more specific, measurable, achievable, relevant, time-bound (SMART) objectives for sustainable transport to the transport sector through its Single Departmental Plan and the carbon reduction plan.

Report on these objectives in the annual report

DfT should describe progress against its sustainable transport objectives in its annual report, including reporting against metrics such as the Sustainable Development Indicators.

The government should ensure all departmental annual reports report progress on cross-cutting sustainability targets such as the Sustainable Development Indicators. As far as possible, this reporting should use identifiable SMART indicators.

Summary of progress

Since 2016, The Department for Transport (DfT) has made little progress in reporting more specifi c, measurable, achievable, relevant, time-bound (SMART) objectives to the transport sector. While DfT’s Single Departmental Plan sets out a wide range of policy commitments, it contains few SMART targets to allow users to track its progress. The Road to Zero strategy on decarbonisation only included clearly defi ned targets for ultra-low emission vehicles (ULEV) registrations by 2030 and 2040 – it had no interim targets to ensure that these longer-term targets were met, nor any specifi c targets relating to other vital issues, such as charging infrastructure for electric vehicles.

The lack of SMART objectives limits the usefulness of DfT’s reporting on environmental issues. While its most recent annual report does include commentary on the work being done to address the UN’s Sustainable Development Goals, its reporting against the Greening Government Commitments is less comprehensive than at the time of the last Environmental Audit Committee hearing.


42 Part Five Department for Transport sustainability update


Objectives for sustainable transport

5.1 Since the Committee’s report in 2016, DfT has revised its Single Departmental Plan several times and has published several strategies that provide more detail on how transport will contribute to the Clean Growth Strategy. The two main decarbonisation strategies published to date are: The Road to Zero, published July 2018, which sets the goal to end sales of diesel and petrol vehicles by 2040 and Maritime 2050, which addresses carbon reduction in the maritime sector. DfT is currently working on a further strategy on reducing greenhouse gas emissions from aviation. We published a report for the Environmental Audit Committee in January 2019, which among other things set out good practice criteria for setting objectives and measuring performance. One of our key conclusions was that for effective performance measurement and management, departments need to have a coherent hierarchy of goals and targets, with clearly defined ways of assessing whether these targets have been met.

5.2 The most recent Single Departmental Plan communicates a wide range of policy commitments and actions to the transport sector and the public. In accordance with government guidance, the public Single Departmental Plan is quite brief but it is supported by a more detailed internal version, which should be used to support business planning. The Committee recommended that DfT should make use of the Single Departmental Plan to communicate a series of SMART targets to the transport sector, but the current Plan does little on this front. There are several references to other strategy documents, such as the air quality strategy, but the only SMART environmental target is to the Bikeability programme, which will deliver cycle training to 300,000 children during 2018-19. We have also reviewed the internal Single Departmental Plan and found that, while it does include policy milestones with delivery dates (for example, to “Increase the number of newly registered ultra low emission vehicles through the plug-in vehicle grants, support the installation of necessary infrastructure and other market support” by March 2019), it does not include any additional SMART environmental targets.

5.3 The two decarbonisation strategies that DfT has produced do not provide the sector with a clear set of measurable objectives. The Road to Zero includes a small number of SMART targets, but these targets are outcome-based and long-term (Figure 6). While these outcome targets are useful, it would provide the transport sector with greater certainty if DfT included shorter-term interim targets and also included output targets for its policy and spending commitments. As an example of the latter, the strategy announces the launch of a £400 million Charging Infrastructure Investment Fund to support the introduction of infrastructure for electric vehicles but does not indicate what scale of infrastructure growth DfT hopes to achieve. Maritime 2050 outlines a strategy that is at a much earlier stage and includes no SMART targets beyond restating the International Maritime Organization’s goal of reducing greenhouse gas emissions from the sector by 50% by 2050 (Figure 2).


Department for Transport sustainability update Part Five 43

Sustainability in DfT’s annual report

5.4 As with previous years’ reports, DfT’s 2017-18 annual report includes a separate sustainability section, with a focus on work being done in climate change adaptation and on understanding the impact of policies on rural areas. In line with the Environmental Audit Committee’s recommendation, the report does include an update of the work that DfT is doing which relates to the UN’s Sustainable Development Goals, which replaced the Sustainable Development Indicators. However, these updates are largely narrative in nature and make no reference to the performance indicators that the Office for National Statistics produces to measure progress.

5.5 The report includes details of progress against Greening Government Commitments and the clearly defined targets associated with them. However, the reporting does not cover the full range of the Greening Government Commitments: further additions to its narrative in its report, to include biodiversity and sustainable construction, as well as food procurement and catering, would see it meeting the Greening Government Commitment transparency criteria more completely. It should also be noted that in 2016, the Environmental Audit Committee raised concerns about DfT’s poor performance against one of the Government Buying Standards (a subset of the Greening Government Commitments), but these are no longer covered in the annual report (see paragraphs 6.11 to 6.15 in Part Six).

5.6 Beyond the Greening Government Commitments, the annual report does not address SMART targets for any sustainability issues. While transport is a major contributor to several cross-government environmental goals, such as reducing greenhouse gas emissions and promoting use of renewable fuels, DfT’s annual report does not address these in any detail. The report does note that total greenhouse gas emissions from transport in the UK increased from 120 million tonnes in 2015 to 125.8 million tonnes in 2016 (the most recent data then available) as part of its reporting against Single Departmental Plan indicators, but there is no commentary on why this has happened or its implications for meeting the emissions reduction target.


44 Part Six Department for Transport sustainability update

Part Six

Governance and oversight

Environmental Audit Committee recommendation on taking a cross-departmental approach

Take a cross-government approach

When addressing complex, long-term issues, the Department for Transport (DfT) should take a cross-cutting, cross-departmental approach, as it has done with air quality.


6.1 DfT continues to provide examples of good cross-departmental working:

• Office for Low Emission Vehicles (OLEV): OLEV works across government to support the early market for Ultra-Low Emission Vehicles (ULEVs) and is sponsored by DfT and the Department for Business, Energy & Industrial Strategy (BEIS).

• Joint Air Quality Unit (JAQU): JAQU coordinates delivery of the government’s plans for achieving compliance with air quality standards and is sponsored by DfT and the Department for Environment, Food & Rural Affairs (Defra).

• Centre for Connected and Autonomous Vehicles (CCAV): CCAV works across government to support the market for connected and automated vehicles and is sponsored by DfT and BEIS.

Summary of progress

There are good examples where the Department for Transport (DfT) works proactively across government, but more could be done to identify and actively pursue opportunities.


Department for Transport sustainability update Part Six 45

These bodies were established before the Environmental Audit Committee’s 2016 report and no further collaborative organisations have been set up since. However, there are other examples of cross-government working fostered by DfT:

• During the development of the second Road Investment Strategy (RIS2) DfT established the RIS2 Cross-Government Group to bring together policy leads from across central government with an interest in the Strategic Road Network. Invitees include participants from Defra, Natural England and the Environment Agency. The group meets approximately four times a year.

• DfT and the Ministry for Housing, Communities & Local Government (MHCLG) held its first joint Executive Committee meeting in January 2018 and will meet again this year. The joint board does not have terms of reference other than those of the constituent boards and considers the interplay between transport and housing provision. The environment was not specifically considered. The director general responsible for decentralisation and growth in MHCLG has a standing invitation to DfT Board Investment and Commercial Committee meetings, where issues of common interest are to be discussed. DfT could use this framework to look at environmental issues such as sustainable communities, but we are not aware of an intention to do so at this stage.

• DfT told us that HS2 Ltd is working with a range of other government bodies to manage its environmental impact.

6.2 DfT does not have procedures and structures in place to ensure opportunities for cross-government working are identified, actively pursued, and have positive impacts on environmental outcomes. DfT could, for example, seek to work collaboratively with other departments on managing infrastructure impacts on biodiversity.

Environmental Audit Committee recommendation on assessing cumulative impacts

Consider the cumulative environmental impact of transport projects

DfT should put in place a detailed cumulative impact assessment, including non-monetised impacts on biodiversity and landscape, of all its projects so that DfT can state definitively whether natural capital is at least being maintained. Consider taking a broader view of matters by looking for solutions outside individual transport sectors.




6.3 There is no detailed cumulative impact assessment across of all its projects and DfT is unable to state definitively whether, when all current projects are taken together, natural capital is being at least maintained as the Environmental Audit Committee (the Committee) recommended. Responding to the Committee’s report in 2016, DfT said “we believe that striving for environmental excellence on every project is the only way to handle a rolling programme of improvements to our transport infrastructure but remain mindful of the overall picture”. It has not changed this position and told us that, in its view, the cost of cross-department cumulative impact assessment would outweigh the benefits. It sees substantial practical problems in producing a single cumulative impact assessment of projects with different characteristics, timelines and impacts on diverse regions/areas of the UK. DfT told us it is developing a database of transport investment proposals which may provide the capability to do this, although this has not been tested. However, it does not currently hold all the information on impact assessments for transport projects, some of which are held locally or in arm’s-length bodies.

6.4 The Committee called for detailed cumulative impact assessment, including non-monetised impacts on biodiversity and landscape, of all DfT projects. DfT’s response citied two examples to support their belief that a project by project approach is to be preferred: High Speed Rail and the Road Investment Strategy. The response said “we have made long-term commitments on biodiversity and other environmental factors, which the delivery bodies will need to show they have met”. We looked at how biodiversity is considered in these delivery bodies and found that HS2 has a clear aim, with monitoring processes in place for no net loss of biodiversity. But the impact of the programme and the way in which this is assessed remains controversial with many stakeholders. Highways England is not on track against some key environmental targets, including managing nationally important sites for wildlife and establishing wildflower grasslands (Figure 13).

Summary of progress

The Department for Transport (DfT) does not monitor the cumulative environmental impacts for all its projects taken together. This could put fi nite environmental resources, such as ancient woodland, at risk.



Figure 13Biodiversity in High Speed Rail and Highways England

High Speed Rail Highways England

Overall biodiversity aim: “achieve no net loss in biodiversity, reducing impacts on species and creating and enhancing habitats”1

Overall biodiversity aim: “a net gain in biodiversity from the Company’s activities by 2040”2

Performance Performance

HS2 Ltd monitors progress against the no-net-loss target through periodic ‘snapshots’, which give an analysis of how the railway may affect different types of habitat. The latest snapshot for Phase 1, carried out in 2017, concluded that good progress had been made, although the goal of demonstrating no net loss had yet to be achieved. Its calculations suggested a position of:

• gains in habitats of principal importance (approximately 375 hectares of grasslands and 80 hectares of habitat of woodlands);

• a 7% reduction in the number of area-based biodiversity ‘units’ generated by replaceable habitats post-construction;

• significant reduction in hedgerow biodiversity units post-construction of approximately 17% (worst case scenario); and

• a gain in watercourse biodiversity units (approximately 6,000 units).

The latest publicly available data show:

• the metric for measuring changes in biodiversity began trials in April 2018 and has not yet been reported on;

• almost 60% of SSSIs on or adjacent to the road network require intervention to meet national objectives by 2020;2

• a project is currently under way to explore how measures to improve biodiversity can be integrated in Highway England’s litter strategy; and

• while Highways England has established 1,000 hectares of wild flower grassland, it has much further to go to achieve its target of 3,500 hectares, which it originally aimed to achieve by 2021, and is now targeted by 2024.

The Department for Transport (DfT) told us that the findings in this 2017 baseline only represent an interim picture of the no-net-loss position, as Phase 1 design continues to develop, and HS2 Ltd and its contractors are actively working to reduce the environmental impacts of the scheme, and continue to seek no net loss to biodiversity.

Notes

1 HS2 Ltd measures changes in habitats via an adapted version of a ‘biodiversity offsetting metric’, developed in consultation with the Department for Environment, Food & Rural Affairs and Natural England). Since 2016 irreplaceable habitats such as ancient woodlands and sites of special scientifi c interest (SSSI) have been removed from the no net loss calculation and treated differently.

2 Forty of Highways England’s 70 SSSIs require intervention to meet the national objective of securing 50% of SSSIs in favourable condition and 95% of SSSIs in favourable recovering condition by 2020 in line with government’s Biodiversity 2020 strategy.

Source: National Audit Offi ce analysis of reports from HS2 Ltd and Highways England



6.5 DfT told us that local cumulative impacts are considered when assessing major infrastructure projects. For example, the environmental statement for Phase 2a of HS2 reports on the likely significant environmental effects of other schemes that are either consented or under construction. This includes the potential effects of Phase 1 and Phase 2b of HS2.

6.6 The Environmental Audit Committee (the Committee) expressed particular concern about the cumulative impacts of transport projects on ancient woodlands. It is entirely possible that this finite, largely irreplaceable environmental resource could be severely impacted through a series of seemingly minor losses from individual transport projects. DfT has not put in place an overall cumulative impact assessment for ancient woodlands across all its projects and has not changed its appraisal system to recognise the finite nature of this important resource. DfT’s National Policy Statement for National Networks (2014) says “the Secretary of State should not grant development consent for any development that would result in the loss or deterioration of irreplaceable habitats including ancient woodland and the loss of aged or veteran trees found outside ancient woodland, unless the national need for and benefits of the development, in that location, clearly outweigh the loss”. DfT considers that this provides sufficient protection.

6.7 DfT has shown a responsive approach to the protection of ancient woodland in the HS2 project. To monitor whether it is achieving no net loss in biodiversity for the HS2 programme, DfT uses habitat as a proxy for biodiversity. In 2016 Natural England was concerned by the inclusion of ancient woodland in this calculation because this did not recognise its finite and irreplaceable nature. In response, HS2 removed ancient woodlands from the no-net-loss calculation and introduced alternative arrangements to minimise loss. However, more still needs to be done to mitigate against a creeping loss across DfT’s portfolio as a whole.

Environmental Audit Committee recommendation on considering environmental issues below board level

Consider whether key environmental issues are considered sufficiently below board level, particularly when decisions about the environmental impact of a particular project are being considered.

Summary of progress

The Department for Transport (DfT) believes its current arrangements for considering environmental issues below board level are suffi cient, and has an environmental strategy team responsible for promoting consideration of environmental issues across the Department. One of the Environmental Audit Committee’s key concerns related to DfT’s ability to take a ‘cross-modal’ approach, and identify solutions to transport problems outside individual transport sectors. While DfT has not introduced any new mechanisms to ensure routine consideration of cross-modal solutions, there are examples since 2016 where it has sought to take a cross-modal approach.




6.8 In its 2016 response to the Environmental Audit Committee’s (the Committee’s) recommendations, DfT did not commit to do more to assess whether environmental issues were sufficiently considered below board level. It considered that its existing arrangements were adequate, and referred in particular to the role of its environmental strategy team.

6.9 DfT told us that its environmental strategy team works to promote a shared understanding of key environmental issues for transport policy among DfT officials; to ensure that strategies are consistent and ambitious with respect to the environment; and to foster relationships between different parts of the department to help deliver key environmental outcomes. For example, it has established a quarterly environmental forum, to bring together working-level officials across a number of environmental issues, including carbon, air quality, noise and biodiversity.

6.10 The Committee’s concerns focused on cumulative impacts across projects (see paragraphs 6.3 to 6.7), It was also concerned that the division of DfT by transport mode means that it tends not to look for solutions to project issues outside individual transport sectors. DfT has not introduced any new mechanisms to ensure cross-modal solutions are routinely considered, but told us about examples since 2016 where it has sought to take a cross-modal approach, including for the Oxford–Cambridge ‘corridor’, and when developing longer-term plans for travel in the south-west quadrant of the M25.

Environmental Audit Committee recommendation on improving compliance with Government Buying Standards for procurement

Improve its compliance with Government Buying Standards for food procurement.


6.11 The latest data available at the time of the Committee’s report (for 2014-15) showed that DfT had achieved a 62% compliance with the Government Buying Standard for food and catering. Compliance with this standard did improve the following year, to 66% for 2015-16 (Figure 14 overleaf). However, it is impossible to know if this improvement continued as after 2015-16 public reporting of compliance figures were no longer mandatory and DfT also stopped collating the statistics internally.

Summary of progress

The Department for Transport (DfT) no longer monitors compliance with Government Buying Standards. This puts the quality of its procurement at risk.



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6.12 DfT told us that compliance with the Government Buying Standards is included in its standard conditions of contract, and in specifications for relevant agreements, but it has stopped collating data from across the Department on the actual compliance of products provided under these contracts. This is partly due to a lack of resource, and partly because it is concerned that a number of the standards are not up to date and do not reflect current best practice. DfT told us that to counteract the lack of currency in the standards it draws on other sustainable procurement guidance, including European Commission guidance on green public procurement.

6.13 Departments are no longer required to report compliance with Government Buying Standards as part of meeting their Greening Government Commitments. Our report on sustainability in the Ministry of Justice also found that the Ministry had stopped collecting data on compliance with Government Buying Standards once mandatory reporting under the Greening Government Commitments was dropped.

6.14 In its 2016 response to the Committee DfT said that a new facilities management contract being rolled out from February 2018 would improve compliance with the food and catering standard. This facilities management contract is with Interserve, and DfT told us that monitoring compliance with Government Buying Standards has not been a focus for the contract so far due to significant ‘onboarding’ issues. The priority has instead been on ensuring compliance with statutory tasks and providing confidence that the estate is safe and compliant. In March 2019, shareholders failed to reach agreement on a proposed refinancing and the parent company, Interserve plc, went into a form of administration, known as a ‘pre-pack’ administration. Its operating companies were purchased by a new company, Interserve Group. The Parliamentary Secretary for the Cabinet Office has stated that nothing in Interserve’s refinancing will affect the delivery of public services. DfT told us that it plans to put a greater emphasis on ensuring compliance with Government Buying Standards over the coming year, including recruitment of additional resources.

6.15 DfT continues to perform well against its Greening Government Commitments for greenhouse gas emissions and paper by 2017-18 had already met the 2020 targets on these areas (Figure 15 overleaf). However, it is not on track against its targets for domestic flights, waste or water. Reducing waste to landfill has, however, proved particularly challenging, and 39% continued to be disposed of in this way in 2017-18, compared with a target of less than 10%. DfT told us that until 2018 it could not require its facilities management contractors to work towards achieving this target, as their contracts all predated its introduction. However, in 2018 all DfT organisations apart from Driver and Vehicle Licensing Agency (DVLA) transferred to the new facilities management contract, which includes the 10% landfill waste target as a key performance indicator. DfT expects that figures for 2018-19 will show that this target is now being exceeded.



Figure 15Department for Transport performance against 2020 Greening Government Commitment targets

The 2020 target has been met already for greenhouse gas emissions and paper, progress is not on track to meet the 2020 target for domestic flights, waste or water

2020 Target(2009-10 baseline)

(%)

2014-15Performance

(%)

2015-16Performance

(%)

2016-17Performance

(%)

2017-18Performance

(%)

Greenhouse gas emissions(% change from 2009-10)

-36 -22 -30 -35 -36

Domestic flights (% change from 2009-10)

-41 -41 -36 -35 -31

Waste (% to landfill) Less than 10% to landfill

37 40 43 41

Paper (% change from 2009-10) -56 -50 -52 -58 -62

Water (% change from 2009-10) - 9 -15 -1 1 10

Notes

1 In 2017-18 DfT restated its Greening Government Commitment fi gures to include the Driver and Vehicle Standards Agency.

2 Figures rounded to one decimal place.

Source: National Audit Offi ce analysis of DfT 2017-18 annual report and Greening Government commitment annual reports


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