What are the financial and operational implications?

Up until the 31st March 2005, the Energy Saving Trust administered grant schemes to help to reduce the cost of converting and buying alternatively fuelled vehicles. However in March 2005 the Powershift scheme was deemed to be in breach of State Aid rules and had to be suspended. It was the intention that a new technology neutral scheme would replace it. The new scheme was approved by the EC but was then scrapped by the Government in June 2006 before it had started. This decision means that there are currently no grants available to assist with the purchasing of vehicles.

There are still grants available from the EST for installing alternative refuelling infrastructure including bioethanol pumps and electricity recharging points. Continuing advances in battery technology have led to commercially viable fully electric local distribution vehicles becoming available. Electric vehicles dramatically reduce fuelling costs and are now available in 7.5 Tonne variants with ranges of up to 160 miles, meeting the needs of many local delivery operators (click here for more details).

There are tax breaks on gaseous fuels, making them significantly cheaper to purchase, and Vehicle Excise Duty (VED) reductions for using alternative fuel vehicles, as the amount of VED you pay is based upon the emissions of Carbon Dioxide (CO2) from the vehicle in question. Company car tax is also graduated depending on CO2 emissions making lower CO2 cars increasingly popular with company car users. Servicing of alternative fuelled vehicles is not a problem and in the case of gas-powered vehicles, because the fuel is cleaner burning, engine life is expanded, less oil changes are required and less maintenance is required.

Operationally, there are numerous examples of best practice and hundreds of alterative fuel vehicles in operation in the UK. See the case studies section for further details.