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Air Quality Zones: the future impacts on businesses in the UK

21 November 2016
The national air quality plan for nitrogen dioxide requires the implementation of Clean Air Zones in Birmingham, Leeds, Nottingham, Derby and Southampton.

Under the Draft Clean Air Zone Framework, businesses that operate older vehicles that do not meet the new higher emission requirements will either have to redeploy their fleet outside these cities, or replace vehicles that do not meet the standards.

This has a cost implication if businesses wish to remain legally compliant. The proposals state that businesses will be expected to pay 43% of the “total fleet adjustment costs” and two predictions of these costs are included the accompanying technical report, which can be found here

The most optimistic prediction is included in section 192 of the report and is referred to as the Central Approach: it predicts that the direct cost to businesses will be £455 million (total fleet adjustment costs of £1 billion). The least optimistic prediction is included in section 211 of the report and is referred to as the Financial Cost Approach: it predict that this will cost businesses £3.87 billion (total fleet adjustment costs of £9 billion). The Central Approach deducts non-monetised benefits, including perceived health benefits, from the full financial cost, whereas the Financial Cost Approach is described as more useful because it demonstrates the lifetime costs of exempt vehicles.

To work out the impact upon an organization, one should consider:

  • Financial cost of upgrading
  • Loss of asset value (depreciation)
  • Infrastructure, implementation and running costs

Some businesses may be able to meet the higher emission requirements by redeploying their existing fleet to a different area. However, where redeployment is not an option, the biggest impact on businesses will materialise through the need to replace vehicles which do not meet the standards with those that do. These are the options for businesses that want to avoid enforcement action:

  • Avoid driving into the Clean Air Zone
  • Continue and pay charge
  • Redeploying vehicles subject to the charge outside the Clean Air Zone
  • Purchasing a vehicle that is exempt of charge
  • Retrofitting existing vehicle

For operators of small HGV fleets, and single owner-operators – transport measures requiring them to upgrade their vehicle could pose a significant cash flow problem and could lead to an increase in retail prices of the goods they carry. This means that the financial impact of Air Quality Zones is likely to affect different supply chains to affect a greater number of organizations.

There are valid arguments for the implementation of Air Quality Zones across the United Kingdom. Air quality limits were first introduced by EU law in 1999, based on scientific assessments of the risks to human health associated with exposure to NO2, and World Health Organization guidelines. The limits also imposed a deadline for compliance in 2010, yet the UK remains in breach in 38 out of 43 zones across the country, where air quality is unacceptably poor. Accordingly, the Secretary of State was ordered by the High Court earlier this year to take remedial action to improve air quality (CO/1508/2016) and this is underpins the reason why Air Quality Zones are being proposed.

The consultation for Clear Air Zones will close on at 12:00 pm midnight on the 9th  December 2016, which can be found here. We will keep you informed of any changes to secondary legislation, and will continue to monitor this situation, as it unfolds.

Contains public sector information licensed under the Open Government Licence v3.0.

SummaryClean Air Zones are proposed in five UK cities, and businesses affected will have to ensure that their fleet vehicles meet various European standards for low emissions. In this article, we highlight the cost implications of achieving legal compliance if these proposals are inacted.  

ISO 14001 is the management system that allows you to manage new changes to legislation like these. Implicit in the standard is the need to identify new legislation, work out how this impacts your organisation, to develop methods to ensure that you are legally compliant, and to review and make informed managerial and strategic decisions. We think that the new Air Quality Zones are an ideal opportunity to showcase how you manage emergent environmental requirements to a recognised industry standard.