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Diesel’s demise poses dilemma for Irish drivers

Since the introduction of the CO2-based motor taxation system in 2008, Irish drivers have been effectively incentivised into buying diesel-engined cars. Photograph: Getty Images/iStockphoto

Since the introduction of the CO2-based motor taxation system in 2008, Irish drivers have been effectively incentivised into buying diesel-engined cars. Photograph: Getty Images/iStockphoto

The tsunami of criticism that has pounded at the shores of diesel-powered motoring is looking ever more likely to wet the feet of the Irish motorist.

As daily revelations regarding air pollution, car manufacturers cheating on their emissions tests and even national governments conniving to protect their home-grown industry grind away at our motoring consciousness, the fact is that diesel power is almost inevitably now going to be officially penalised.

Growing concerns over the effects of diesel exhaust fumes on public health will almost certainly mean that motorists will have to bear the brunt of extra costs, possibly in the form of increased motor tax charges, or possibly in other “stealthier” ways if diesel use is to be curbed.

While plans are yet far from formed, the Department of Communications, Climate Action and Environment confirmed to The Irish Times that it is working on a consultation paper for a new clean air strategy which “will seek to bring about improved health outcomes and the wider environmental benefits that will accrue from improved air quality.

“The strategy will target priority air pollutants in an integrated manner and will seek initiatives across the relevant sectors including transport with the aim of identifying cost-effective short, medium and long-term goals and action for reducing air pollutant levels” said a spokesperson for the department.

Extra charges

It’s not known yet known what form any extra charges or penalties could take nor whether they might be phased in for older, more polluting vehicles first.

When pressed on what is to be done with the thousands of Irish car buyers who, at the behest of government, bought into diesel since 2008, the department said that our queries would be best directed to Dublin City Council.

The council said that we should talk to the department, which presumably means that as with almost all in Irish politics, the final say rests with the Department of Finance.

Since the introduction of the CO2-based motor taxation system in 2008, Irish drivers have been effectively incentivised into buying diesel-engined cars, as until more recent technological developments in petrol and hybrid power, no other form of propulsion could guarantee a low enough emissions rating to qualify for cheaper tax.

In the wake of the Volkswagen “dieselgate” scandal, however, there are greater and greater concerns over the effect of diesel exhaust fumes on city centre air quality, not least because the most polluted air tends to become trapped by tall buildings and held close to the pavement, where it can do the most damage to the respiratory systems of passers-by.

Legislators around the world are moving to take action on perceived diesel problems, however. The city authorities in Paris, Madrid, Mexico City and Athens last year confirmed that they would totally ban diesel car use by 2025.

Closer to home, diesel car drivers wishing to enter the city of London, and park there, will have to pay more from the April 3rd this year under plans being trialled by the City of Westminster Council.

The charges amount to an additional £2.45 (€2.88) per hour of parking, on top of the existing £4.90 (€5.78) per hour charge. The system, which applies to such high-density areas as the Marylebone Road, Baker Street and Westminster University, has been introduced following concerns that the concentration of nitrogen oxides (NOx, gases which are harmful to the lungs and which are produced in large quantities by diesel engines) and particulate matter have reached harmful levels, above the recommended healthy level.

Pollution concerns

It will use number-plate recognition systems to ensure that the appropriate parking charge is being paid.

However, Edmund King of the UK Automobile Association (AA) said that pollution concerns shouldn’t be used as a stick with which to beat drivers who thought they were doing the right thing.

“Like any new tax regime which makes money for local councils, this scheme is likely to spread like wildfire,” he told the Daily Telegraph.

“However it will hit many drivers who bought diesel cars in good faith, with many of them encouraged to buy diesel cars by previous government incentives which promoted them. Frankly, they would do better to reduce air quality by getting rid of older diesel trucks, busses and taxis which cause most of the pollution.”

That is certainly a major issue, and asking the Irish motorist to carry the fiduciary can for diesel’s ills may well be politically untenable. Indeed, one senior Irish motoring industry executive averred, on condition of anonymity, to The Irish Times that the Government “is running scared from the idea”.

Presumably, officials are wary of triggering the sort of melt-down in second-hand values that occurred when the motor tax and vehicle registration tax regime was changed in 2008.

Values of petrol-engined cars, and cars with high CO2 emissions, melted down virtually overnight, leaving both individual owners and car dealers with cars that had suddenly, in some cases, become unsellable.

The notion that, forgiving the pun, bad news is in the air for diesel power is having a slight but noticeable effect on the Irish car market.

Diesel sales fell in January, by a not-insignificant 7.2 per cent, bringing total diesel demand to 65 per cent of all cars sold, much lower than the average since 2008. Demand for petrol cars rose by 3.55 per cent, but perhaps more significant was the sharp spike in sales of hybrid, plug-in hybrid and electric cars.

Hybrid sales rose 117 per cent compared with January 2016, while pure electric sales rose by a massive 242 per cent (from a staggeringly low base, it must be said). Plug-in hybrid sales were up by 6.8 per cent.

Hybrid power

One company benefiting most from this slow switch away from diesel is Toyota. The Japanese giant’s devotion to hybrid power is starting to pay off and Toyota Ireland’s chief executive Steve Tormey told The Irish Times that demand for the hybrid version of its new C-HR crossover is above 70 per cent of models sold.

Mr Tormey also dropped a hint about one route that the Government might take to rebalance petrol and diesel sales without dramatically affecting existing residual values – attack the corporate and fleet market.

“The softening of diesel demand is something that commenced prior to ‘dieselgate’. Since then, the EU Commission seems to have taken a dim view on diesel and in the future the manufacturing costs of diesel engines will rise in order to meet stricter future regulations with a consequent reduction in the offer of diesel powertrains from the industry, especially in the smaller vehicle segments,” he said.

In relation to hybrid, as a significant and environmentally effective powertrain option we have had ongoing discussions with Government and have provided compelling evidence on how hybrid vehicles assist in the reduction of CO2 emissions and improve air quality,” said Mr Tormey.

“If the current grants for hybrid vehicles are continued to 2020 for all manufactures then these benefits will continue to support Government in its drive to reduce CO2 emissions, reduce the level of fines Ireland will be exposed to from the EU for failing to achieve agreed targets and critically improve public health.

“In addition, there is a request to Government to allow companies reclaim VAT on petrol fuel for hybrid vehicles similar to the existing scheme for diesel.

“Given the level of pent-up demand we are experiencing from companies and fleet buyers for hybrid, this remains one of the biggest impediments to transforming the Irish car market away from diesel. However, while companies can continue to reclaim VAT on diesel but not on petrol there is no incentive for them to make that change.”

Such a background tax change could have a profound effect, given time to propagate through the market, but Ireland is caught between a pollution rock and an emissions hard place – diesel power.

Car ownership grows

Nissan Ireland’s managing director James McCarthy says the Government’s vacillating on its electric car strategy could be plunging us into as much as a €6 billion fine from the EU.

“Ireland is failing utterly in its EV [electric vehicle] strategy and CO2 emissions continue to increase as the population and car ownership grows.

20,000 EVs by 2020 is achievable if the Government gets serious, takes action and stops making grand statements of intent,” said Mr McCarthy at the Transport and Climate Summit in Dublin.

“The initial target set in 2010 was to have 230,000 electric vehicles on our roads by 2020. It was reset to 50,000 EVs in 2014 and a new target of 20,000 EVs is now proposed. How do you hit a moving target? The delivery of an electro mobility strategy is central to Ireland meeting its commitments to reduce CO2 emissions. The combined 2020 and 2030 costs to the State of failing to meet those commitments is estimated at between €3 billion and €6 billion.

He proposed the introduction of policy requiring 20 per cent of the car fleets purchased by the State, public bodies and local authorities to be EVs, levying fines against local authorities who fail to achieve EV targets and a benefit-in-kind exemption for those driving EVs for business.

“Local authorities have no skin in the game. Dublin, with about 40 per cent of the national car fleet should have a minimum of 8,000 EVs registered by 2020.

The Dublin taxi fleet should be mandated to go EV from 2018 with the support of a scrappage scheme,” said Mr McCarthy.

“Currently, there are around 2,000 EV drivers in Ireland. The population and demographics of Ireland and Norway are quite similar and the same EV cars are available in both countries. Norway has succeeded in changing the dial on EVs because it took action to encourage and reward EV driving.”

Scrappage scheme

Such a scrappage scheme has been mooted and rumours are that it will form part of the Government’s consultation paper. But where will customers then turn, if they have to hand in their diesels?

Hyundai’s Tucson is the best-selling car in Ireland at the moment, and while all of the Tucsons sold so far have used the 1.7 CRDI diesel engine, there is a 1.6-litre petrol option.

Switching from the cheapest diesel to the cheapest petrol would save a buyer a potential €1,750 on the purchase cost. Their annual motor tax cost would go up by €190 a year (an extra €570 over three years).

The cost of fuel, at today’s prices, would go up by about €470 annually (to €1,494 in total), assuming an average annual mileage of 17,500km (splitting the difference between petrol and diesel mileage averages, according to the CSO), or €1,410 over three years of ownership.

Taking the Tucson as a test case, the cost of running a diesel would have to rise by about €300-€400 over three years to make it more costly than running a petrol model, although those figures would be considerably different depending on the make and model in question.

It might be best for the Government to sit tight and wait a while before it begins to penalise diesel. According to the vast Schaeffler Group, which owns vehicle and tyre technology company Continental, the cost of “mild hybrids” for petrol cars is coming down fast, and in the very near future the new technology of 48-volt hybrids will be able to reduce emissions from an average petrol-engined family car to as little as 85g/km of CO2.

Schaeffler chief technology officer Peter Gutzmer told Automotive News that “in our view, the future of the combustion-engine powertrain is 48-volt electrification combined with plug-in hybrid high-voltage solutions.

“The majority of automakers have to think about installing 48-volt hybrid drives. I think that in the next 10 years 48-volt systems will account for the majority of hybrids. I even think 48-volt systems will have the potential to extend or even replace what Toyota is very successfully doing.

“There’s only one question that needs to be answered: can we finally reach our cost targets? We are not there yet. We are close but not there.”

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