Consulting » Decisions – Green fuels

Both industry and government are attempting to persuade the European Commission to give the go-ahead to a new schedule of clean-fuel car grants. The current PowerShift scheme, run by TransportEnergy, part of the government-backed Energy Saving Trust, was put on hold when it was revealed it had fallen foul of EU laws on grant sizes and types.

Under the scheme, grants are offered to companies that purchase certain clean-fuel vehicles to offset the extra cost compared with running a normal petrol or diesel vehicle.

But EU laws are strict about the size of grants for environmental initiatives and demand wide availability, meaning the current scheme, focused on a relatively small offering, will have to be relaunched to meet EU requirements this year.

The shake-up affects a number of other schemes run by TransportEnergy, including the CleanUp programme for older vehicles and the New Vehicle Technology Fund.

New grants should come into force on 1 April 2005, the day after the current scheme closes, but manufacturers fear orders for clean-fuel models could come to a halt from April because the grants are not available.

The government has stepped in to show its support for the future of whatever replaces the current scheme. The Department for Transport revealed this year it was providing a £24m budget to fund the schemes, although it admitted any relaunch – and any new funding for fleets – will be held until the new blueprint has been given the go-ahead by the European Commission and by relevant local authorities, including The Scottish Executive, Welsh Assembly and Northern Ireland Assembly.

Transport Secretary Alistair Darling said: “We are making representations to the EC to try to get this resolved as quickly as possible.”

Pressed on how long it would take, Darling said: “I can’t say. We are dealing with the EC.”

In February, Confederation of British Industry director general, Sir Digby Jones, raised the issue during a fact-finding mission to meet European officials in Brussels. In meetings with new commissioners whose responsibilities embrace business and industry, he said he was worried about the likelihood that PowerShift grants would cease from 31 March.

But there is still an upbeat message from the Energy Saving Trust, which is charged with helping the government achieve a published target that 10% of all new vehicles sold by 2012 will produce less than 100 grammes per kilometre of CO2 – the main greenhouse gas. Currently, it is less than 3%.

Philip Sellwood, chief executive at the Energy Saving Trust, said: “The timescales for transition to the new programmes will be tight, but we will make every effort to support our partners, work closely with the DfT and seek their compliance with European state aid rules.”

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