The True Cost Of Fuel Duty

The UK has made headlines this week by reiterating its interest in charging drivers per-mile-driven to recoup the potential shortfall in income from fuel duty following the ban on petrol and diesel cars from 2030.

It is expected that the rise of electric vehicles will leave the UK with a £40bn deficit to recover, and this loss of income has all-too-often been levelled as an excuse not to adopt zero-emission electric vehicles. But is it an accurate reflection of reality, or an opportunity for the UK government to implement a new tax?

Today we investigate whether this is the way forward for road transport, how this might overlook the impact of emissions on public health and what this might mean for Ireland and other nations as we increasingly make the switch to electric cars.

Fuel Duty & Public Health

While the UK claims that the loss of its fuel duty will leave it with a £40bn deficit to make up, this figure is willfully selective and deliberately overlooks the broader implications of fossil fuel on public health and the environment.

Moving away from vehicles powered by fossil fuel will not only bring improvements in reducing the number of pollution-related illnesses, early deaths and ecological destruction – it will also bring tangible economic benefits.

A 2018 study by Public Health England found that the health and social care costs of air pollution in England alone could reach £5.3bn by 2035 unless significant action was taken to curb emissions.  

However, once the economic cost of the 36,000 premature deaths in the UK each year due to air pollution are taken into account, the World Health Organization estimates the total economic cost of air pollution to exceed £54bn annually.

The transport sector accounts for around 26% of the UK’s greenhouse gas emissions, so it is clear that a switch to zero-emissions vehicles will make a significant impact on premature deaths, as well as common illnesses associated with air pollution and traffic noise.

“36,000 people die prematurely due to air pollution in the UK each year”

As such, it is very clear that the UK government is either not looking at the whole picture and the potential economic benefits that will come from reduced air pollution, or it is willfully seeking new opportunities to tax its population at a time when the economic divide has never been greater.

This becomes increasingly important when we consider that pandemics are significantly more likely to occur as the climate crisis worsens, and that Covid-19 in particular is worsened in areas with lower air quality. Given that the UK has already spent £46m in the fight against this particular virus and seen its economy contract by 11-12% this year alone, we can see how costs could escalate quickly if emissions are not curbed.

One other cost to consider – particularly for a Conservative UK government who have fervently promoted an anti-immigration message – is the estimated 1.2bn people who will be displaced by the climate crisis by 2050, according to the Institute for Economics and Peace.

This will, of course, lead to a rise in people seeking both aid and asylum – ironically, those people will predominantly come from nations that have greenhouse emissions that are just a mere fraction of those of the UK. This influx of people will bring a rise in both government relief costs and expenditure on public services, such as the NHS.

It is now clear that the climate crisis was a key factor in the displacement of 12 million people in Syria since 2011, alongside the nation’s civil war.

Fuel Duty & Climate Crisis

Of course, public health isn’t the only thing affected by harmful greenhouse gas emissions, and we are on the very brink of climate collapse with just seven years to avert the worst case outcomes.

The UK’s record on climate action has left a lot to be desired, and its current government has inexplicably added climate action groups such as Extinction Rebellion to its list of terrorist organisations.

Yet this inaction comes against a backdrop of ecological and economic warnings. Despite already spending £2.2bn on responding to and managing flooding, the UK Office of Science and Technology has warned that climate crisis-related flooding threatens to cost the UK in the region of £200bn in property damage in England and Wales alone, with over 4 million people at risk.

“The UK could end up spending £27bn per year in the 2080s on flood damage”

A 2019 report by the Centre for Ecology and Hydrology found that a third of British pollinators are in decline, with every square kilometre in the UK losing an average of 11 species of bee and hoverfly between 1980-2013. The loss of these creatures will have major impacts not only on agriculture, but also on the natural food web, leading to further losses.

In short, while the UK might face some short-term financial deficit from the loss of its fuel duty, this will undoubtedly be offset by the ecological and economic gains that it will make from taking meaningful climate action.

How This Impacts Ireland

Doubtlessly many other nations, Ireland among them, will be looking at the UK’s proposed approach as a possibility to implement a new taxation to bolster their treasuries.

Yet, as we have outlined, this is somewhat misleading in terms of the total cost to a nation once the related sectors are taken into account. This is particularly important in Ireland as, despite many vague promised and a new climate pledge, we continue to be one of the worst examples of climate action in Europe – with the third highest greenhouse gas emissions in the EU.

In fact, the government had to be taken to court for its inaction on the climate crisis, with the country facing fines of up to €600m per year for missing its emissions targets from 2020 onwards, which could rise to as much as €7bn by 2030.

In terms of the cost to our national budget, fuel levies in Ireland accounted for €2.3bn in 2015 (latest available figure – more recent data has been requested) according to the Irish Revenue, so our deficit would be significantly smaller to recoup compared to the UK.

“Ireland faces fines of up to €600m per year for missing its emissions targets”

In fact, of the more than 3,000 plant and animal species in Ireland that are subject to conservation assessment, around a quarter are facing extinction.

Of course, air pollution comes from a broader mix, but 20% of all of Ireland’s greenhouse gas emissions come from the transport sector. Making the switch to electric cars – or, in fact, away from cars entirely – will make a significant impact on the climate crisis, the loss of ecology and our financial stability as a nation.

Be cautious of those who would lead you astray with alarming figures without recognising that all our systems and sectors are inextricably linked.