Could the Government short-circuit the electric revolution?

Will the UK Government stand idly by and allow billions in fuel duty to slip between its fingers as vehicle and equipment owners switch from diesel to electric?

I think we can all agree that, in principle, the replacement of all diesel-fuelled demolition and construction equipment with an electric-powered alternative is an admirable ambition.

Just imagine a world in which excavators, dozers and wheel loaders could operate almost silently in our city centres, disturbing neither the peace nor the fragile ecosystem in which we all co-exist.

Sadly, there are many obstacles standing between our gas-guzzling present and a quietly humming, electric Utopian future.

There are currently doubts about just how much work an item of electric construction equipment can accomplish in the real world before having to be hooked up to the mains.   There are justifiable concerns about whether the National Grid has sufficient capacity to embrace these new machines, and whether the power produced by the grid matches the green credentials of the machines themselves.   Electric machines have also not been around for long enough to get a real handle on likely machine resale values.   

Then, of course, there is the concern over what becomes of those lithium-ion batteries when they reach the end of their working life.   Can the lithium be recovered in an economical and sustainable way or are they headed to the landfill.   And then there’s that burning question – do we have sufficient lithium to meet our needs?   Estimates suggest that global lithium reserves are around 14 million tonnes.   But through our insatiable appetite for mobile phones, laptop computers and our increasing desire for electric vehicles and machines, there is a very real possibility that we could use up this finite resource.

Despite all of these unanswered questions, the biggest obstacle threatening the widespread adoption of electric construction equipment here in the UK might prove to be something different entirely.   The biggest stumbling block could, in fact, be the UK Government; the very same Government that constantly espouses its environmental ambitions; the same Government that has signed up to global climate accords.

And, as ever, the issue is money.

Fuel duty on petrol and diesel fuel currently earns the Exchequer £24.3 billion a year.   That is equivalent to nearly 2.3 percent of the government’s  total tax take.   Since the abolition of red diesel and the loss of the rebate that accompanied it, the diesel used by the construction sector has helped top up fuel duty coffers.

Killing off the combustion engine means missing out on these revenues as the electricity used to charge electric cars and machines is not currently taxed in the same way as petrol or diesel.

According to new analysis by the Resolution Foundation think-tank, that looming loss of fuel duty means the Treasury could face a £10 billion budget deficit by the early 2030s.

At a time when the Government seemingly cannot afford to pay nurses a decent working wage, such a shortfall is something the Treasury will surely not countenance.

For electric cars, the Resolution Foundation is pushing for a road tax of 6p-per-mile on electric vehicles (EVs).   The influential think tank argues that the levy would help meet the Government’s shortfall while also keeping electric cars cheaper to run than petrol or diesel equivalents.

But what of electric equipment?   Road tax is unlikely to apply but the Government will be determined to safeguard the additional duty it secured with the abolition of red diesel.

Huge fluctuations in electricity prices have already left users questioning the true viability of electrical power.   The thought that they might yet face some additional form of tax liability will only serve to increase that uncertainty.

Combined with all the other obstacles – real or perceived – standing in the way of wider adoption of electric machines, it suddenly feels like the long-awaited electric revolution might be further away than many of us hoped.