A Push for Diesel Leaves London Gasping Amid Record Pollution

[SageBrush]

This explains the current rates BIK rates 2017 - BIK Tax Bands UK - Find BIK 2016/17

But in the past diesel was given the advantage. The common as muck BMW 320d was also charged 0 annual road tax (putting it on a par with an EV). Ridiculous.

Thanks.

If I am understanding the BIK correctly, diesel is not given an advantage since the CO2 emissions are per distance. Moreover, a 3% surcharge is added (since 2015 I think.) I accept the externalized cost of the exhaust pollutants has not been adequately captured, but the company motivation to purchase diesel is not explained yet.

I'm more inclined to think that the wide-spread adoption of turbo in diesel is to blame here. It allowed the manufacturers to downsize the engines and gain spectacular results on the government CO2 testing that is not seen on-road. The BIK is fine as a CO2 based scheme; the Euro version of the EPA was gamed. Again.

As an aside, the BIK table stands out by making a big taxation deal over relatively small differences in CO2 emissions in the already efficient cars, and then treating everything else the same. In US terms the taxation is the same for any car with worse than 37 MPG -- and that is using the Euro testing. In EPA terms taxation levels off at MPG below ~ 26 MPG. What rationale supports that scheme ?

 

[McRat]

The higher the combustion temperature, the better the efficiency, but the higher the NOx levels. The NOx can be removed post combustion using urea.

VW opted to cheat instead.

The most efficient engines so far are very large 2 stroke turbo diesel engines.

 

[arg]

If I am understanding the BIK correctly, diesel is not given an advantage since the CO2 emissions are per distance. Moreover, a 3% surcharge is added (since 2015 I think.) I accept the externalized cost of the exhaust pollutants has not been adequately captured, but the company motivation to purchase diesel is not explained yet.

Here's the chart going back 10 years: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/532303/TC2b.pdf

I can't find the version for previous years, but the CO2-based scheme was introduced in 2002, and for the early years (as you can see in the footnote of the above PDF) the 3% diesel surcharge wasn't applied if your car met the EuroIV emissions rules (those rules then became mandatory for all new diesels so the concession was removed).

So it looks like the scheme is only offering a small incentive to diesel. However, that ignores how things work in practice. Note that the scheme works on the list price of the car when new - you then pay tax on a percentage of that fixed amount in all the following years while you still have the car, the percentage changing according to the CO2 group and fuel type. Generally, staff will be given a pay/benefits package that includes a car of a fixed value - some companies will say "you can have a car up to the value of £xxx", or more commonly, "your pay-grade can chose from this band of cars in our approved list", where that band is all cars of about the same price. So the employee doesn't get much choice over the list price, but of two cars at the same price - say a petrol model with slightly higher performance or the same car with a diesel - they will pay significantly less tax over the next few years if they go for the diesel.

As @dpeilow mentions, there's also Vehicle Tax (sometimes called "Road Fund Licence" by older people), which again has been until this year in bands by CO2 emissions per km, this time without any offset for diesel. That tax is more relevant to non-company drivers, particularly in the used market where the tax is larger in relation to the value of the vehicle - so again making diesels more attractive. This one has been reformed and now imposes a big CO2-related tax in the year of purchase but then a flat rate (same for petrol/diesel, but zero for EVs) in subsequent years - so there's now less reason for the used buyer to prefer diesel, but there won't be many petrol cars on the used market since the incentives for the new buyer are still firmly geared towards diesel!

 

[SageBrush]

So the employee doesn't get much choice over the list price, but of two cars at the same price - say a petrol model with slightly higher performance or the same car with a diesel - they will pay significantly less tax over the next few years if they go for the diesel.

Are you saying that because of the higher MPG of the diesel and similar prices per gallon at the pump ?

If so, I agree but that mirrors what plays out in private purchases. The BIK did not tilt the table.

 

[ItsNotAboutTheMoney]

The higher the combustion temperature, the better the efficiency, but the higher the NOx levels. The NOx can be removed post combustion using urea.

VW opted to cheat instead.

The most efficient engines so far are very large 2 stroke turbo diesel engines.

Navistar made the same mistake, thinking that they could improve their EGR system to meet emissions targets and it suffered greatly as a result.

It's often forgotten that the same tests that showed VW real-world emissions to be much higher than the test ratings showed Mercedes and BMWs that were getting reasonable real-world results. The Mercedes and BMWs were using urea-based SCR to control NOx. But VW is a mainstream manufacturer and wanted to avoid the added costs of SCR. Ironically, we should be thankful of VW's mistake, because it change policy in the final diesel hold-out.

 

[arg]

Are you saying that because of the higher MPG of the diesel and similar prices per gallon at the pump ?

If so, I agree but that mirrors what plays out in private purchases. The BIK did not tilt the table.

No. Price at the pump isn't a big deal for these drivers (more so for private purchasers) as they will get at least business fuel paid for.

But the diesel cars end up in the lower CO2/km bands.

So the driver making the decision can choose between car A (petrol) and car B (diesel) with approx the same list price;

Here's a worked example. I picked at random a pair of similar priced BMWs from this table (I haven't bothered to go back to the BMW site to cross-check):

BMW 3 Series 316d SE Auto (diesel) £27,975 117g/100km
BMW 3 Series 320i xDrive SE (petrol) £28,105 159g/100km

Let's suppose the approved models on the company list have added a few options so they both come to exactly £30K list price. The employee can choose either of these models and won't see any effect of the running costs.

If he picks the diesel, the tax this year is assessed on 117g -> 22%, plus the 3% diesel surcharge -> 25% of list price £30k = £7500
If he picks the petrol, the tax this year is assessed on 159g, -> 30% of list price £30K = £9000

If his marginal tax rate is 40%, then he pays £7500*40% = £3000 out of his pay packet for the diesel, £3600 for the petrol.
Next year the bands move, but are still 5% apart.

So he's £600/year better off actual cash in his pocket for picking the diesel rather than the petrol; he gets to drive a slightly slower car (but in this example with a better stereo or something to make up the difference in list price).

Those were just two comparators picked at random, but if you go up and down the list you find that for cars around the same list price then the diesel nearly always comes out lower BIK.

If you go back to before 2012-13, there was a much bigger difference if the diesel could get into the under 120g/100km band (which a lot of the smaller diesels could) - that gave 10% (13% with diesel surcharge) with typical petrol cars in the mid 20's % and so paying about double the tax.

 

[SageBrush]

So the driver making the decision can choose between car A (petrol) and car B (diesel) with approx the same list price;

Here's a worked example. I picked at random a pair of similar priced BMWs from this table (I haven't bothered to go back to the BMW site to cross-check):

BMW 3 Series 316d SE Auto (diesel) £27,975 117g/100km
BMW 3 Series 320i xDrive SE (petrol) £28,105 159g/100km

Clear, thanks.

My point is that this is not a BIK problem or subsidy; it is
1. Externalized tailpipe emissions
2. A CO2 emissions level not seen in on-road driving because the diesels game the CO2 testing better than the petrol cars.

Trust me, I am not defending diesels! I'm pointing out that the problems are not specifically due to goofy BIK calculations of the CO2 emissions. If the diesel in your example actually reduced CO2 emissions by 26.5% the reduction in BIK would be warranted by the terms. In any case, the higher density of carbon in diesel is not at play here.

By the way, my understanding is that petrol cars are starting to play the same games, meaning GDI with turbo. These cars will also have much higher tailpipe and CO2 emissions than the testing results. The only way to resolve this game is update the test to something approaching normative driving and to have on-road testing as a sanity check against dyno cheats.

 

[SageBrush]

It's often forgotten that the same tests that showed VW real-world emissions to be much higher than the test ratings showed Mercedes and BMWs that were getting reasonable real-world results.

Not so much, but usually better than VW. And that is verrry faint praise

 

[arg]

My point is that this is not a BIK problem or subsidy

Well, the BIK certainly distorts the situation. BIK tax exists in principle to ensure that people who receive "free" benefits such as cars pay a similar amount of tax as people who receive a higher salary and spend it to run their own car (and that's approximately what it did pre-2002). Taxing the externalities of fuel use has historically been done via fuel duty - added as an amount per litre or gallon and so directly taxing the emissions.

The changes to BIK were a deliberate attempt to influence the make-up of the vehicle fleet (rather than taxing the consequences), and was extremely successful. Unfortunately, the strategy was focused on CO2 to the exclusion of other effects.

This 2006 official analysis of the impact contains some interesting numbers: according to their surveying, 60% of company car drivers had been influenced by the new rules to choose cars based on the CO2 figure; the company car fleet had gone from 33% diesel in 2002 to 50-60% by the end of 2004 (and at the time of that report was projected to rise to 60-70%). I can't find any more modern figures, but subjectively it seems very likely that the prediction came true.

The 2006 report notes that there was a trend towards diesel in the general market, but the company car fleet had changed much more rapidly (presumed to be as a result of the changes).

The reports accompanying the national registration statistics sometimes have some extra analysis - this one from 2014 points out that 54% of newly-registered cars are owned by companies, yet only 8.6% of the total fleet are company owned, hence company buying decisions have a huge impact on the cars available to buy on the used market. At end 2014, the national fleet was only 36.2% diesel.

 

[SageBrush]

Not so much, but usually better than VW. And that is verrry faint praise

A follow-up graphic from the Guardian

 

[SageBrush]

Unfortunately, the strategy was focused on CO2 to the exclusion of other effects.

Sure, but as I keep saying, the CO2 data itself has been gamed by the manufacturers



THE IMPACT OF OFFICIAL VERSUS REAL-WORLD ROAD LOADS ON CO 2EMISSIONS AND FUEL CONSUMPTION OF EUROPEAN PASSENGER CARS
Jörg Kühlwein

If the diesel CO2 emissions actually reflected on-road emissions they would not gain preference via BIK taxation.

 

[arg]

Sure, but as I keep saying, the CO2 data itself has been gamed by the manufacturers

OK, but there's several parts to this argument:

• Taxing fuel can relate directly to the CO2 generated, with little scope for gaming. There's the question of whether the relative taxes on diesel and petrol are correctly represent their carbon content, but in the UK at least they are not too far off (with pump prices for diesel marginally above petrol).
• The BIK changes (and to a lesser extent the vehicle tax changes) suddenly made the manufacturer's CO2 figures very significant - where previously gaming them didn't really matter as nobody was paying much attention.
• There's your point that gaming of the CO2 figures has occurred to a greater extent with diesels.
• There's my point that the policy has been focused on CO2 (whether or not it succeeded in that aim due to being gamed, that was what they were going for), with very little consideration of air quality.

The combined effect of all this has been a big switch to diesel, and the consequent effect on air quality.

It's not clear what the various parties were thinking about air quality during this. While setting out their policy as "we reward low CO2, we don't care how you achieve it", the government must have known that it would cause a big swing to diesel, and they were aware of the potential air quality issues, hence the 3% penalty on "dirtier diesels". The thinking seems to have been (from the various announcements of the tax changes) that this would continue to be an optional thing - initially for diesels failing to meet EuroIV, then when EuroIV became mandatory there would be EuroV coming along, then the problem would be "solved" and the 3% surcharge was due to disappear from 2016. It was a surprise announcement in the 2015 budget that the 3% was going to be kept until 2021 - supposedly until tighter EU emissions controls will again "solve" the problem.

Likewise, the car manufacturers must have gone into this with open eyes - evidently they believed diesels were the easiest way for them to meet the demand for lower CO2 figures, and weren't worried about the need to fix NOx and particulates. Did they really believe they could easily meet these new lower limits on NOx? Or did they think they could persuade the regulators to set the limits higher on the basis that the targets were impossible to meet (as they seem to have successfully done with "conformity factors" on the new real-world testing regime)?

 

[jerry33]

One of the big problems with the CO2 regulations are that they forgot about every other pollutant. A balance is required, but we're not likely to get it for some time--if ever.

 

[jimmyjohn]

You should come to Sparks / Reno Nevada --- redneck central out here. I had a dream of moving here and finding a job at the Gigafactory and finding an area filled with people in love with their mountains and the environment. After moving to Sparks 6 months ago, I failed to find anything at Tesla and am overcome by the smog mentality of the residents; it's pure depression.

And AFAIK, the UK has totally missed the Rolling Coal movement!

"Make America Gasp Again!"

 

[Pollux]

One of the big problems with the CO2 regulations are that they forgot about every other pollutant. A balance is required, but we're not likely to get it for some time--if ever.

Trial balloon 1: the consequences of too much CO2 in the atmosphere outweigh the consequences of any other auto emissions. All are worth controlling/eliminating, but CO2 is the long-term worst.

Trial balloon 2: the drive towards electrifying transport moots nearly all the auto emissions issues, except particulates from brakes. Then we have emissions issues in the power generation sector, but we have to fix those problems anyway. So as power gets cleaner, BEVs get cleaner (can't do that with an ICE!).

Thanks,
Alan

 

[Pollux]

You should come to Sparks / Reno Nevada --- redneck central out here. I had a dream of moving here and finding a job at the Gigafactory and finding an area filled with people in love with their mountains and the environment. After moving to Sparks 6 months ago, I failed to find anything at Tesla and am overcome by the smog mentality of the residents; it's pure depression.

Sorry re not connecting with Tesla!

What do you mean by "smog mentality"?

Thanks,
Alan

 

[jerry33]

What do you mean by "smog mentality"?

I think he really means bully mentality. Rolling coal is basically done to intimidate others--the definition of a bully.

 

[RubberToe]

Trial balloon 1...
Trial balloon 2...
Thanks,
Alan

Up, Up, and Away !