Fleet CO2 and Efficient Mobility

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1 Fleet CO2 and Efficient Mobility CONTENTS An evolving policy landscape Vehicle selection, technology and alternative fuels Driver behaviour and eco-driving training Efficient maintenance arval.co.uk

2 An evolving policy landscape Managing fleet emissions has never been more important than it is today; reducing CO2 reduces cost and that makes good business sense particularly in a tough economic climate. Additionally full disclosure of company CO2 emissions will shortly become mandatory for some companies, from 2014 all FTSE listed companies will have to provide details of greenhouse gas emissions in their annual reports and it seems likely that this requirement will be extended to other companies over time. In recent years, the policy of successive Governments has seen company vehicle taxation become exclusively linked to the environmental performance of the vehicle. This has been aided by CO2 emission improvements delivered by vehicle manufacturers keen to avoid missing their own EU driven emission targets, (now extended to 2020). Fleets and fleet drivers have responded extremely well with the average fleet vehicle now emitting 133g/km 1 compared with 158g/km 2 only 4 years ago. There is also now a clear focus on van CO2 as companies recognise the cost savings that can be made in this area as well. Average New Car CO2 CO2 g/km CO2 improvements and EU targets and progress 1 The Society of Motor Manufacturers and Traders (SMMT) 2 SMMT (F) 2012 EU Target 2020 EU Target Year It is now not unusual for fleet policies to include CO2 caps alongside a defined eco-vehicle option that might include a full electric or some form of hybrid vehicle. The innovative approach taken by the fleet sector has been supported by Government through the introduction of a purchase grant programme. This is aimed at increasing the takeup of ultra low emission vehicles (both cars and vans), lower levels of Benefit in Kind (BIK) for low emission vehicles and the creation of the Office for Low Emission Vehicles (OLEV) to coordinate cross Government policy in this important and evolving area. Manufacturers have and continue to invest heavily in new technology and are bringing an increasingly fuel efficient and diverse range of technologies to the market; covering both innovation in conventionally fuelled vehicles and alternatives. To date the regulatory and fiscal environments have delivered significant CO2 reductions. However, the speed of the reduction has led to a situation where Government tax receipts from company vehicles have declined and in a period of austerity, the 2012 budget saw the continued reduction in the CO2 bands used to calculate BIK and corporation tax. More importantly, a significant increase in the tax burden for ultra low emission vehicles in future years is likely to result in a reduction in the take up of these vehicles in a fleet environment. 2

3 2012 key budget points Company car benefit tax rates For cars emitting more than 75g/km of CO2, the rate will change by the following: April 2013 April 2014 April 2015 April 2016 Petrol +1% +1% +2% +2% Diesel +1% +1% +2% -1% From April 2014 company car tax rates will increase by 1% for cars emitting more than 75g/km of CO2 to a maximum of 35% in and and by 2% in and The 1% decrease for diesel vehicles is a result of the 3% supplement being removed from April The maximum rate changes in April 2015 to 37% from 35%. In April 2015 the 5-year exemption for zero carbon and ultra-low carbon emission vehicles will end, therefore vehicles up to 94 CO2 will move to 13% from April 2015 and a further 2% in 2016/7*. Company car corporation tax rates From April 2013, the capital allowance threshold for standard rate business cars will reduce from 160g/km to 130g/km. The threshold above which the lease rental restriction applies will also reduce to 130g/km. Where next for CO2 emissions reduction? In this regard nothing and everything changes during the coming years. A focus on selecting the right vehicle and then ensuring it is managed and driven properly will remain the key factors in delivering CO2 reduction. However, technology will change the nature of both areas; vehicle selection will become more complex whilst driver management will begin to encompass the integration of offboard smartphone and on-board telematics data. Making the right choices that effectively harness the potential in both areas will continue to enable significant CO2 and cost reductions to be achieved. *NB: The Chancellor signalled a possible review of this measure in the Autumn Statement. 3

4 Focussing on reducing fleet CO2 delivers maximum benefit to the company and it is essential that it is not considered in isolation. Vehicle selection, technology and alternative fuels Vehicle Selection Selecting the right vehicle is essential to fully realise both cost and environmental benefits. The decision might be as straightforward as petrol versus diesel, but in an increasing number of situations; hybrid, electric or range extending technologies, might need to be reviewed. The key to this decision is the drive cycle; where and when the vehicle will be used and in the case of a commercial vehicle its payload. Allied to this for some technologies will be the availability of a viable recharging infrastructure. Vehicle and fuel technology grid Powertrain Description Opportunities Risks Internal Combustion Engine Petrol Internal Combustion Engine Diesel Hybrid Plug in Hybrid Full Electric Hydrogen Road Fuel Gases Conventional petrol engine significant economy improvements currently being delivered through turbo charged direct injection technology. Diesel engine efficiency developing through use of turbo chargers, inherently more efficient than petrol as a fuel type. Petrol or diesel engine vehicle supported by an electric motor. Some vehicles can operate on full electric for short distances, whilst in others the electric motor simply provides additional power when required. As hybrid but with a longer electric only range and the ability to plug the vehicle in to re-charge the battery. Battery powered vehicle with no alternative means of propulsion. Battery powered vehicle where hydrogen is used to generate electricity via an on-board fuel cell. Cars will almost always be conversions to a standard engine. A limited number of factory built bifuel petrol/gas vans are available. Ability to take advantage of an increasing number of sub 100g/ km vehicles as manufacturers work towards 2020 emission targets. National refuelling network and lower price per gallon than diesel. Driver acceptability. Consider whole life cost position v diesel as price differential rises. Use of common rail diesel engines has improved performance and efficiency. National refuelling network. Popular second-hand vehicle. Will become more tax efficient when diesel BIK supplement removed. Can offer improved fuel efficiency particularly in urban environments. Increasing choice as more manufacturers introduce the technology. National refuelling infrastructure. Improved fuel efficiency in urban environments where electric only range can be fully utilised. National refuelling infrastructure. Product availability will increase over time. Government grant to support new car purchases and up to 8,000 for vans. Zero tailpipe emissions and 5,000 Government grant to support new car purchases and up to 8,000 for vans. Low fuel costs. Zero tailpipe emission fuel. Government support is available and manufacturer investment in this technology is heavy. Lower pump prices. Rises in cost of fuel. Higher pump price than petrol equivalent over several years. When used for the wrong drive cycle fuel consumption can suffer. Currently limited product availability, electric only range can be variable. Higher initial purchase price. Suitability currently limited by battery range. BIK benefits to be reduced. Infrastructure likely to limit availability until at least Initial vehicles likely to be expensive. Government duty support was withdrawn. Poor residual value performance. No infrastructure development. 4

5 Whole Life Cost Comparison Even allowing for the correct size of vehicle and matching choice to the appropriate drive cycle will not guarantee the most cost effective vehicle is being selected. By taking into account all the factors shown in the True Cost of Operation model shown below, it is possible to compare vehicles with a similar CO2 performance across their operational life ensuring cost, emission and operational objectives are met. Whole Life Cost Profile Whole Life Costs 5

6 Driver behaviour and eco-driving training The term efficient mobility brings together all current and future aspects of a CO2 and cost effective fleet operation, one element that is central to achieving overall objectives is the ability to influence driver behaviour. The benefits of selecting the correct vehicle can only be fully realised through the driver, new technology is now offering the potential to manage driver performance through the use of both on-board and mobile devices. What can drivers do to reduce their CO2 footprint? Drivers play a very large role in determining your fleets CO2 emissions. They do this through the way they drive; their attitudes, behaviours and the vehicles that they choose. It is essential for drivers to understand how they can reduce fuel consumption and their impact on the environment: 1 Check the revs Change up between 2,000 and 2,500 rpm (revolutions per minute) revving the vehicle s engine wastes fuel. Avoid fast getaways at traffic lights accelerate slowly when the light turns green. The faster you accelerate the more fuel is consumed. 2 Drive smoothly Avoid sharp acceleration and heavy braking this saves fuel, tyre wear and reduces accident rates. Drive smoothly and brake with the engine and use your foot brake as little as possible allowing the vehicle to slow naturally. 3 Change gear at the right time Shift down at approximately 1,000 rpm. Shift up to the next gear at approximately 2,000 rpm in diesel vehicles or 2,400 rpm in a petrol engine. 4 Use air conditioning sparingly It significantly increases fuel consumption. 5 Drive away immediately when starting from cold Idling to heat the engine wastes fuel and causes rapid engine wear. Eco-driving training not just good for the environment Eco-driving training provides on-road driver tuition to drivers to improve fuel efficiency and to reduce carbon emissions. Equipped with and using the correct techniques, knowledge and attitude towards responsible driving, could make fuel savings of between 10 and 15%. Eco-driving training is usually carried out in conjunction with Arval s Practical Driver Assessment Programme, but training can be provided in isolation if required. Benefits of eco-driver training This training can benefit both your company and drivers by: Helping you meet your Duty of Care obligations Reduce fuel costs Reduce accident rates and vehicle repairs Identify drivers who need additional driver training 6 Avoid short journeys A cold engine uses almost twice as much fuel and catalytic converters can take five miles to become effective. 6

7 What can drivers do to reduce their CO2 footprint? (continued) Useful Information 7 Avoid excess idling Idling gets you nowhere but still burns fuel. Turn the engine off when you are in a queue for a long period of time, or waiting for someone. Restarting a modern engine uses effectively no extra fuel. 8 Stick to speed limits and make your fuel go further Driving at 85 mph rather than 70mph uses around 25% more fuel. Fuelefficiency drops significantly over 70 mph so use cruise control on major roads if you have it. 9 Plan your journeys Getting stuck in heavy traffic dramatically increases CO2 emissions per mile travelled. Avoid congestion, road works and getting lost by using route planning tools in advance and set radios to receive traffic alerts. 10 Check tyre pressure regularly Under-inflated tyres are dangerous and can increase fuel consumption by up to 3%. Essential Guide to Travel Planning org.uk/pool/resources/ essential-guide-to-travelplanning-final-mar-08.pdf 11 Switch off if stuck in a jam Cutting the engine will save fuel and stop emissions. 12 Remove unnecessary weight Leaving the roof rack when not in use can increase drag significantly and push up emissions by 30%. Keep the boot or back seat clear of unnecessary items that add weight to your vehicle. Do not carry rarely used or unnecessary tools or equipment particularly relevant for van drivers. Optimise the weight of materials used to fit-out vans. 13 Drive less Encourage drivers to use alternatives to driving such as video conferencing or car sharing. Consider the use of telematics to review and improve journey planning, particularly relevant for multi-drop van fleets. Use of telematics can also help to eradicate unauthorised vehicle usage. Eco-Driver Training Contact your Arval Account Manager, call or arval.co.uk 7

8 Efficient maintenance Maintaining your company vehicles and reducing emissions Vehicle condition has a significant impact on CO2 emissions. These rise considerably if engines are allowed to go out of tune or if faulty tyres or steering add to vehicles rolling resistance. Potential carbon costs of vehicle faults Fault Increase fuel consumption by up to: Misaligned wheels +6% Tyres under-inflated by 20% +2% Source: Michelin Maintenance and vehicle awareness practices The following carbon-friendly practices will help you and your drivers to remain safe and reduce the impact your vehicles have on the environment: 1 Service the engine A well-maintained engine can minimise CO2 emissions, so follow the manufacturer s recommendation on servicing. Information regarding service intervals can be found in the vehicle manual. 2 Keep tyres at the right pressure Correctly inflated tyres are safer and last longer. A tyre under-inflated by 20% can increase CO2 by 2%, will wear more quickly and is susceptible to failing. The best time to check the tyre pressure is when it is cool outside or first thing in the morning. Faulty wheel alignment will also slow down the rolling resistance of the vehicle increasing CO2 emissions and wearing tyres out more quickly. 3 Use the correct oil Always use the appropriate grade of motor oil, as the manufacturer s recommend lubricant can prevent unnecessary CO2 emissions. Higher quality oils can also help the engine operate more efficiently but be careful not to over-fill the oil. 4 Keep an eye on fuel consumption The more aware you are of the amount of fuel you use, the more you can do to try to reduce your CO2. If you notice your fuel efficiency is decreasing it could indicate a problem with the vehicle. 8

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