Motoring expert Farah Alkhalisi on the practicalities of greening an organisation's vehicle fleet and the range of options available
Cleaning up an organisation’s transport policy and business vehicle fleet is not only about sustainability; besides reducing its carbon footprint and energy consumption, there is also an ever increasing incentive to do so to save money.
Quite apart from rising fuel costs, the upcoming changes to company car tax thresholds for qualifying low-emission cars (QUALECs) will prompt many fleet managers to consider vehicles which produce less, or no, carbon dioxide from their exhaust pipes.
Yet rushing to trade dependable diesels for electric vehicles, for example, may not be the answer. Alternative technologies and powertrain solutions (the various bits that make the vehicle go – the engine, electric motor, transmission and gearbox, plus control systems) will not necessarily suit the needs of every vehicle fleet or the facilities available to them.
Nonetheless, the range of unconventional vehicles is increasing as automotive manufacturers introduce entirely new models using alternative technologies or “greener” versions of existing models.
Plugging in: the electric option
You do not have to be a fan of a certain popular BBC TV motoring show to know that electric vehicles (EVs) are the subject of much debate. Or to realise that the ratio of EVs sold to dedicated column inches, YouTube videos and media coverage remains very small. Just 343 Nissan Leafs were sold in the UK in the first six months of 2012, for example.
However, though going electric will not work for every business user or company, all-electric vehicles are becoming more viable in particular niche sectors, and numbers are expected to increase as a wider variety of models, and vehicles with improved versatility, come onto the market.
A typical “pure” battery-electric EV will still only manage 90–100 miles between recharges, a figure that may fall further in cold weather and difficult operating conditions, but for local or low-mileage use, they can be appropriate.
Citroën, for example, has recently delivered three C-Zero EVs to Stirling Council’s environmental services team; these cars (part-funded by Transport Scotland) will be put to day-to-day use, with a view to expanding the council’s electric fleet in the future.
“There are customers with a very specific need which fits well with EVs, such as those in the public sector, local authorities or those delivering materials from one fixed point to the next, in a finite urban setting,” says Citroën spokesman John Handcock.
So running an all-electric fleet or pool of cars is unlikely to be practical for a long time yet, but EVs are already working to supplement conventional cars in larger fleets. The Nissan Leaf is being trialled by corporations such as Coca Cola, British Gas and the National Grid, according to Nissan’s fleet sales director Barry Beeston, as well as by local councils. Nissan Leafs now operate out of Coca Cola’s Wakefield and Uxbridge sites, while National Grid has taken delivery of four of the vehicles for use by its inspectors in London.
Meanwhile, Mitsubishi has supplied its i-MiEV to the likes of the Environment Agency, councils in Camarthenshire and North Lanarkshire, and the Thames Valley Police.
The agency took delivery of its first i-MiEV last May and Mark Ford-Powell of its fleet operations commented: “Over recent years we have seen technology in cars improve resulting in many low-CO2 cars on the road and in our fleet. The introduction of an electric car to our fleet will provide us with further CO2 savings and the opportunity for us to measure the long-term suitability of operating an electric car.”
Go electric, save money?
Electric vehicles remain comparatively very expensive to buy outright or to lease. However, local schemes, such as the Transport Scotland initiative, and the nation-wide programme run by the Department for Transport’s office for low-emission vehicles (OLEV) aim to bridge the gap in purchase price between an EV and its conventional ICE (internal combustion engine) equivalent.
OLEV’s plug-in car and plug-in van schemes, which run until 2015, offer grants of up to £5,000 per qualifying car or 25% of its showroom price, or £8,000 and 20% of the price for new vans.
These incentives reduce the price of an i-MiEV and Renault Kangoo Van ZE, for instance, to £23,990 and £13,592 (excluding VAT) respectively.
Electric cars are currently exempt from annual road tax and benefit-in-kind company car tax (until April 2015), and qualify for a 100% first-year capital write-down allowance.
London-based businesses or drivers travelling regularly into central London will perhaps benefit the most, however. EVs are exempt from the £10-a-day congestion charge, potentially saving owners around £2,500 a year (EVs must be registered with Transport for London, costing £10 a year).
There is also the opportunity to save on everyday running costs. A full charge, giving 90–100 miles in a typical EV, can cost less than £1 or, at worst, up to £3.50, depending on the electricity tariff used.
Charging overnight on an off-peak tariff is the best option, providing an achievable 2p-a-mile energy cost. Peugeot has calculated a saving of more than £1,765 for every 10,000 miles travelled in its iOn EV, compared with a similar car returning a typical 30 miles per gallon in a city.
Peugeot’s iOn customers include solar technology developer G24i, based in Cardiff, which will use the wind turbine that generates power for its head office to recharge its two cars.
Though not every EV user will be able to fit their own solar array or harness wind power, and much domestic electricity in the UK still comes from gas- or coal-fired power stations, many owners and operators choose to sign up to a renewable-source supplier.
And, although sceptics have pointed out that EVs are typically more carbon-intensive in their manufacture than vehicles with conventional powertrains, recent research for the Low Carbon Vehicle Partnership found that, over their projected lifespan, EVs still win out over their petrol and diesel counterparts.
With electric cars expensive to buy despite the OLEV grants, and residual (resale) values uncertain, manufacturers are aiming to ease concerns by offering comprehensive all-in lease deals that cover servicing and routine maintenance, as well as measures to reassure customers over battery life.
“Our leasing solution is a creative way of our assuming the responsibility for the vehicle, ie its residuals, and tackling anxiety over an emerging technology,” says Citroën’s Handcock. “It’s a fixed amount of money and all you have to do is charge it and insure it.”
Renault, meanwhile, has taken the step of leasing the batteries that will power the Kangoo Van ZE, Fluence ZE saloon and upcoming Zoe supermini separately, with all battery repairs, replacement or maintenance covered as part of its package.
The charging conundrum
Most manufacturers recommend that you recharge using an approved, dedicated power point – not an extension lead from a domestic socket. The £250–£1,000 cost of installing a dedicated charging facility at a workplace can be regarded as a legitimate business expense and is tax-deductible. Some local councils will offer free charging at their on-street charging points, while others are issuing reduced-rate – or even free – parking permits for EVs.
Nonetheless, the biggest operational drawback, aside from the limited range between recharges, remains access to recharging facilities, and the time taken for a full recharge. Typically it can take up to six or seven hours for a 100% charge from a conventional socket, though 32-amp fast-chargers can give up to 80% in as little as 30 minutes.
At the moment, most EV users recharge at home or at their workplace, as research trials for BMW’s Mini E programme found.
Peugeot spokesman Kevin Jones says that their biggest orders for the iOn so far have come from areas where there’s been a concentration of charging facilities. “It depends on where the charging zone initiatives are.
It gives a company the confidence that they can go further,” he says, adding that “charging (a car) is a different way of life, but not really any different to having to charge up your phone or laptop.”
Public recharging infrastructure is growing, however, with fast-charge points being installed at motorway service stations, in car parks and in other public areas. Brighton-based Elektromotive recently announced plans to install 10,000 public access pay-as-you-go charge points across the UK, and London is on course to install 1,300 publicly accessible points across the city by 2013.
Counting the cost
Despite grants and an expanding charging network, the fleet and leasing industry remains sceptical about the longer-term cost of running EVs. “Whole-life costs point away from electric vehicles,” says Neal Francis, managing director at leasing company Pendragon Contracts.
“Operationally they are a challenge, and financially you are going to pay a premium. Electric vehicles are still demonstrably more expensive in terms of acquisition costs, and we would not at this point advise jumping into an all-electric fleet.”
Data from CAP Motor Research underline this, putting the three-year, 24,000-mile cost of running a Nissan Leaf at just over £16,000, compared with less than £14,500 for a close equivalent Volkswagen Golf 1.6 TDI 105 Match DSG.
And, while the predicted second-hand value of both vehicles is quite similar – £10,800 for a Leaf and £10,050 for a Golf – there is scepticism about the likely demand for used EVs. “It’s very easy to sell a Golf, but I suspect it’s going to be harder to sell a Leaf because the market for it is so limited,” warns CAP chief editor Christopher Crow.
“The big issue is price, and the length of the warranty of the batteries,” adds Andy Cutler of Glass’s Guides, who nonetheless sees Renault’s separate battery-leasing system as “a huge advantage, if a customer is going to keep the vehicle a long time”.
Insurance is more costly in many cases for EVs, but savings can be made on their simpler servicing and maintenance.
“Depending on usage cycles and how much people pay for energy, we believe there is a strong case for cost savings, dependent on battery hire, which is paid up front,” says Andy Heiron, head of Renault UK’s electric vehicle programme. “We’d urge anyone interested to get out their calculators, get a quote and work out their energy savings.”
Engines with benefits
Pure EVs are not the only option when it comes to greening a fleet. For higher-mileage and less localised use, some degree of electrification remains an option, with range-extended EVs (REEVs), such as the new Vauxhall Ampera and Chevrolet Volt, addressing “range anxiety” by adding a small engine which acts as a generator, kicking in to supplement the electric power unit when needed.
Low-mileage drivers who regularly recharge may find that they can do the majority of their driving on electric power and rarely engage the engine at all. REEVs are conventional-feeling to drive, the engine boosting acceleration as required and helping out the motor for overtaking and going uphill, for example. However, with even the cheapest Volt costing £29,995, even with the £5,000 grant, they are pricey, and it is a complex solution as yet unproven in long-term everyday use.
Petrol-electric hybrid technology, as used in the popular Toyota Prius and models including the Honda Insight, Honda CR-Z and Lexus CT 200h, requires no external recharging, has a longer track record and has proved to be durable – many 10-year-old Prius cars are still clocking up high mileages and have been found to be as trustworthy as any other Toyota.
Such hybrids are at their most efficient in stop-start city driving, when they can start up and pull away from a standstill in a short-range all-electric mode, but may be less efficient than comparably powered conventional models in higher-speed conditions such as motorway driving.
Diesel-electric hybrids, including Peugeot’s hybrid4 models, are starting to come to the market, and for those with access to recharging facilities, plug-in hybrids, such as the Prius PHV, promise increased capability in their all-electric mode. The Volvo V60 plug-in hybrid, meanwhile, is both diesel-electric and externally rechargeable.
Cost-wise, petrol-electric hybrids do work out more expensive to buy and run than their conventional equivalents, says Francis at Pendragon Contracts, but he does see a place for diesel-electric models.
“Diesel hybrids could be quite an attractive proposition for the fleet sector, borne out by their whole-life costs and the fact that most fleets are running diesels anyway.”
As well as their better fuel-efficiency, diesel-electric hybrids are expected to have higher resale values than petrol-electric models and EVs.
“Diesel-electric hybrids make a much stronger case,” says Crow, “but you’re paying a high premium, and until the technology becomes more mainstream, it’s probably not going to stack up as a business case in the short term.”
Still, the low carbon dioxide emissions from hybrids means lower tax bandings than for conventional counterparts, and some models are eligible for enhanced capital allowances. Those vehicles emitting less than 100g of CO2 per km (g/km CO2) are also exempt from the London congestion charge.
There is a wide variety available, from the runaround Toyota Yaris hybrid to the luxury Porsche Panamera S hybrid saloon. There are also four-wheel drive models, SUVs and crossovers such as the Peugeot 3008 hybrid4 or Volkswagen Touareg 3.0 V6 hybrid, for those who really need to go off-road or tow a trailer.
Keeping it conventional
With continued improvements to traditional internal combustion engines, there remains a lot to be said for sticking with tried and tested petrol- and diesel-powered cars, perhaps downsizing, either in terms of engine size and power, or in the choice of vehicle itself where possible.
ICE vehicles are getting cleaner and more economical. Carbon emissions from new cars in the UK fell a further 4.2% in 2011, reaching a record low of 138.1g/km CO2, the Society of Motor Manufacturers and Traders reported recently. It also found that new cars in the UK now emit 27% less carbon than in 1997, and are on average 18% more fuel efficient than their used counterparts.
Many models now feature stop-start technology, which automatically cuts the engine when it’s idling, which can reduce fuel consumption and emissions during city driving in particular.
Fuel injection, valve timing and exhaust-treatment technologies are getting ever more sophisticated in petrol and diesel powertrains alike, and improved transmissions, the use of light-weight materials and enhanced vehicle aerodynamics are all playing a role in reducing the impact of the ICE.
And, importantly for fleet operators, the industry has a clearer idea of ICE vehicles’ resale values and operating costs across their life cycle, so more accurate whole-life costs can be calculated.
The 2012 Budget brought the announcement that company car tax rates, levied at a percentage of new list price, would increase from 2014 for cars emitting more than 75g/km CO2, and that from April 2015, the exemption for zero-emissions and ultra-low carbon emissions vehicles (including EVs and plug-in hybrids) would end.
For the financial year 2012/13, cars emitting 0–75g/km CO2 are levied at 5% of list price for benefit-in-kind and those emitting 76–99g/km at 10% – the threshold for QUALECs will fall to 94g/km for 2013/14.
Another important threshold to bear in mind is 130g/km CO2. From 2013, the outright purchase of cars emitting less than 130g/km can be written off against profits at an 18% rate, a 10% saving over vehicles that emit more emissions.
The range of ICE vehicles emitting 99g/km CO2 or less is now extensive; versions of popular superminis and city cars such as the Audi A1, Fiat 500, Ford Fiesta, Mini, Seat Ibiza, Vauxhall Corsa and Volkswagen Polo now fall into this category.
Likewise, numerous larger vehicles including the Audi A3 1.6 TDI 99g, Citroën C4 1.6 e-HDI, Seat Leon 1.6 TDI CR Ecomotive, Skoda Octavia 1.6 TDI CR, Vauxhall Astra 1.7 DCTi ecoFLEX, Volkswagen Golf 1.6 TDI CR and the Volvo V50 1.6D DRIVe also emit 99g/km CO2 or less.
And, going up to the 130g/km CO2 limit gives no end of choice of mainstream models.
Don’t forget the drivers – or the data
Greening a fleet is not only confined to vehicles: when and how they are driven, and maintaining an effective management policy, is just as important.
Monitoring mileage and miles per gallon is now easy using fuel cards or telematics, while the heavy-footed could benefit from eco-driving training. Figures from the Driving Standards Agency suggest that drivers schooled to adopt a more energy-efficient driving style could cut their consumption – and thus carbon dioxide emissions – by 10%–15%.
“It’s easy to get involved in looking at vehicles with new technology,” says Chris Endacott, director of Gfleet, an independent sustainable transport consultancy. “But if each vehicle is not being used efficiently or driven well, you’re not going to get the results. We constantly come back to how efficiently you use the energy you’re buying, whether it’s electricity, diesel or petrol.”
Gfleet has calculated that using 392 litres of diesel produces a tonne of CO2, costing cost around £460 before VAT. By contrast, a tonne of CO2 from natural gas costs around £100, and a tonne of CO2 from electricity £140.
This brings home the fact that, by reducing fuel use, fleets can make not only a major impact in terms of improving their carbon footprint, but also cost savings. “If you’re going to cut carbon,” says Endacott, “cut your most expensive carbon.”
He points to the importance of collecting detailed data on how each vehicle in a fleet is used, the mileage it does and the fuel consumption it is returning before assessing its suitability for its role. Endacott also champions “fuel management” – that is, keeping tabs on individual drivers’ fuel usage, where the fuel was bought and how much it cost.
“Fleet managers have the problem of integration of their data,” he says. “You may have people buying fuel on fuel cards, company credit cards, their own cards – but all of that fuel should be tracked down and accredited to a vehicle and driver.”
He warns that without continued and ongoing monitoring, drivers who have undergone efficiency training may revert to their old habits.
Another key way to improve a fleet’s environmental performance, says Endacott, is to reduce the use of a “grey fleet” – privately owned cars or vans driven on business, which are often older, less efficient and more heavily polluting vehicles.
This is a particular issue in the public sector, he explains, where “there are still some organisations that pay lucrative rates, up to 65p a mile, and it’s difficult to give people an incentive to get out of their cars.”
Fleet operators could consider further ways to reduce business mileage, perhaps by introducing travel plans and incentives for employees to take public transport, lift-share (see 'A vehicle for change' to learn about BT’s scheme) or exploit technology, such as video conferencing.
If taking to the roads is unavoidable, some businesses and organisations are starting to downsize or cut their fleets altogether, instead joining car clubs and daily rental schemes.
Integrated points-based mobility management systems, giving access to a variety of vehicles for different tasks, tickets for public transport and perhaps even incentives for walking and cycling, are also on their way to the UK.
Powering future vehicles
Fuel cell cars are still only in the field trial stages, but as hydrogen becomes more readily available as a fuel, this highly energy-efficient technology will be a further alternative. A fuel cell contains electrodes and a film of electrolyte fluid. As the cell takes in oxygen, the hydrogen is catalysed and broken down, releasing electrical energy, with the only by-product being water vapour.
On-board storage of pure hydrogen has been an issue, as it needs to be compressed and contained at very high pressures. Some prototypes have instead carried hydrogen-rich substances, such as methanol or ethanol, from which the hydrogen is then extracted in a reformer. Safe refuelling practices and strong fuel tanks are being developed, and cars such as the Honda FCX Clarity and Hyundai ix35 FCEV have been through rigorous crash-testing.
In the long term, hydrogen has been hailed as “the fuel of the future” as fuel cell cars have all the zero-emissions benefits of EVs and the range of internal combustion engine cars, but do not need heavy, bulky batteries nor a dedicated recharging infrastructure.
At the moment, there is just one hydrogen refuelling station in the UK open to the public – at the Honda production plant in Swindon – and fuel cell vehicles are not available for general sale. However, a small number are taking part in trials with selected fleets.
What's in a Label?
From November, new tyres will bear a label similar to the energy-saving-rating labels that can be found on white goods such as fridges and washing machines. New European legislation (Regulation 1222/2009) will require that any tyre sold in the UK comes with a label measuring its impact on the environment.
Tyre labels will contain three pieces of information. First, like white goods labels, they will demonstrate the fuel efficiency of the tyre using a categorisation system running from A to G. The category letter will be displayed on the label and each category will link to a colour, also on the label. A is bright green, G is dark red.
The greener the category rating the higher the fuel efficiency of the tyre and the lower its environmental impact. Second, tyre labels will offer information on wet braking distances so that motorists can be sure they are buying a safe tyre if they select one that is also highly environmentally friendly. The third piece of information will be the noise levels of each tyre at speed, measured in decibels.
So what makes a tyre “green” and why do tyres impact the fuel efficiency of a vehicle? As tyres roll along the road they deform to accommodate changes in the road surface. As the tyres deform they release energy in the form of heat. This energy comes from the engine and can account for up to 25% of all fuel used.
The majority of this is to overcome the resistance of the tyres alone, so accounts for no distance travelled and therefore, on average, one in every four visits to the fuel pumps only covers getting the tyres moving from standstill.
The new breed of “green tyres” contains a high percentage of neodymium polybutadiene rubber – a synthetic rubber that has been specifically designed to retain more of the energy that is usually released by tyre deformation, reducing energy consumption and therefore fuel consumption. So small changes to the materials in a tyre can have a massive impact on fuel and environmental efficiency.
Buying green tyres thus reduces fuel consumption and produces less carbon dioxide. Research from the University of Munich suggests that, on average, a family car travelling 20,000 miles a year can reduce its carbon emissions by up to 300kg and drop its annual fuel bills by up to £250 by switching to a set of A-rated green tyres.
The figures suggest that tyre labelling, if used properly, will have a significant impact on both the environment and our wallets.
Kim O’Connor, managing director of LANXESS in the UK
