Tuesday, 25 June 2013

What if we just slapped them in the face with a fish?

I was delighted to see the indefatigable campaigner Simon Birkett yesterday calling for a ban on diesel vehicles:

"All diesel vehicles from the most polluted parts of London should be banned by 2020."

The evidence now made available to us shows that the most polluted of these parts is the stretch of the North Circular at Walthamstow.  This will be no surprise to any reader who has ever driven there.

But can we really ban diesel vehicles from the North Circular?

Well, I propose this:

All commercial vehicles operating within the M25 must be emission-free by 2023

This is simply taking the LEZ to its logical conclusion.  Here’s how to do it:

We build a series of large consolidation centres at key junctions around the orbital.  This is a concept that has been successfully implemented in the construction sector, and developed further for the Olympics.

Any and all commercial deliveries that originate from outside the M25 will have to use the consolidation centres to transfer and, if appropriate, partition their loads onto smaller, predominantly electric vehicles.  All intra-London movements would only be allowed if they are zero-emission.

The costs of building the consolidation centres will be considerable.  Each centre could easily be 20 acres; and with land prices and development costs a programme of, say, 10 centres ringing the city could cost – ooh, let’s use a round number, with no NPV nonsense - and call it a billion pounds.

There’ll be other costs too, of course.  All road hauliers will say that this measure would increase their costs (new vehicles, levies to use the consolidation centres, that sort of thing), and this would be passed on to consumers, so the prices of all transported goods – which is, after all, pretty much all of them – would go up.

And, of course, many businesses will predict that the increase in their cost base would exceed the willingness or ability of their customers to pay, and they would go bust.  So there’s a cost there, too.

But hang on.  The deadline for the change is ten years away.  Over that time frame virtually all users and operators of commercial vehicles will in any case buy a new vehicle.

Also, new market entrants will see the opportunity presented by the consolidation centres and develop new distribution offers (think of Zipcar, for example). (Heavens, we could even think of setting up a publicly-backed mutual to run services from the consolidation centres if we wanted.)  If you (as a retailer of goods) decide that you can no longer afford a van, then someone will figure out how to provide that service for you. (That’s the miracle of the supply side under capitalism.)

It’s also possible that these zero-emission vehicles will be more expensive that their traditional alternative.  Well, yes, maybe that’s true now; but would it still be true in 2021, or 2022 or 2023?  Demand for such vehicles has been limited so far (it’s a catch 22, of course; there’s insufficient demand because the prices are high; and insufficient investment in increasing supply, which would reduce the price, because there is insufficient demand).  Well what if you made these kinds of vehicles and knew that literally hundreds of thousands of them were going to be needed, soon, because London was going to ban diesel vehicles? You’d want a share of that action, wouldn’t you?  So supply would increase – and the price would come down.

So it’s possible – I’d hazard probable – that the net additional costs to the freight sector – and, by extension to the ‘consumer’ – will be zero, or so close to zero that it would disappear as background noise.

(I’m aware, of course, that there will be effects from all this on the rest of the world, especially Britain, beyond the M25; but, on balance, this article is already long enough and the full justification for why I think the displacement and second-order effects will net out positively will just have to wait for another time.)

And the consolidation centres?

Well, another thing we know is that “The health costs of air pollution in the UK have been estimated at up to £20 billion a year”.  (Reflect on that for a second.) So let’s say that London’s share of this is 20% (roughly in line with population, but a bit higher to reflect the fact that London has worse air pollution than anywhere else).  So that’s £4bn.

How much of this £4bn is attributable to emissions that come from commercial diesel vehicles?  Well, that’s a tricky one.  There is much weaselling in the world of measuring air quality, because of the weather and the winds and the hundred and one different things that could be in the air that affect human health, and scientists not wanting to make a claim that can’t be precisely verified and so on and so forth.

But most London Boroughs are clear that traffic is the single largest source of nasties in the air; so let’s say, for the sake of argument, that 20% of all air pollution in London, on average, is a result of commercial diesel vehicles; and that this would be gone by 2023.

There’s probably not a straightforward linear relationship between improvements in air quality and reductions in respiratory ill-health and concomitant declines in health spending; so let’s guess that a 20% decline in air pollution results in a 15% decline in health expenditure.

Well that’s half a billion pounds.  A year.

Which you could use to – oh, I don’t know – fund a network of consolidation centres around London? In just two years you’d save enough money to pay for it.  And, in fact, if you wanted to fund such things over a 25 year period (a la PFI) then you could assume much smaller reductions in health expenditure, and factor in borrowing costs and the costs of all the various hangers-on that inevitably accumulate around big projects and maybe some transitional relief to very small businesses - and it would still stack up.

So what, exactly, is the problem?

Well, there are two answers to that.

The first is that regulators and legislators are as fearful of the future as ordinary consumers and are frankly terrified of upsetting ‘business’ in any way that might endanger ‘growth’.

By way of illustration, back in 2007 or 2008 I had the opportunity to listen to John Selwyn Gummer talking about his then recently completed study “Blueprint for a Green Economy” (which, though well received and – in my view, at least – impressive, has not only been airbrushed completely from current government policy but is, interestingly, remarkably difficult to find in hyperspace…)

Anyway, someone in the seminar asked a question about planning and building standards, with the inference that it was all well and good to call for higher standards of ‘green-ness’ in buildings, and to propose delivering those standards through the planning system, but it was well known – said the questioner – that the standards included within planning applications were progressively eroded during the actual development process, and that most buildings were nowhere near as green as they were ‘supposed’ to be and that the main reason for this was the chronic and acute shortage of building control officers.  That is: no-one ever checked whether the commitments made by developers to secure planning permission were actually implemented, so developers acted, rationally, on that basis.

Sorting this is simple, Gummer responded (if I remember correctly).  It is simple if you understand how business works.  Having introduced new and stretching green targets through planning, he explained, he would (if in charge) simply demolish the first completed building that had failed to meet the promised standard.  No flim flam, no negotiation, just a straightforward and direct use of the powers that are available.

You would only need to do this once.  No business would want to countenance the risk of this happening to them; it would be far more sensible (commercially sensible) just to build the building as you’d promised.

This astonishing policy bravura is almost impossible to imagine in the current climate; but is breathtakingly right.

Same thing applies with banning commercial diesel engines from inside the M25.  Businesses (and, especially, their representative bodies) would moan and whinge bitterly between now and 2023, and would no doubt commission and publish innumerable studies showing that the end of the world was nigh; but the reality is that businesses – or, more precisely, the supply side – simply get on with whatever it is they do within whatever constraints are operating at the time.  Within weeks of the imposition of the ban, I predict, it would seem as if it should always have been like this.

Smoking in pubs and restaurants, anyone?

And the second part of the problem is the reassuring and bland alternatives that are made available, one of which landed in my Inbox just a few hours ago: “An affordable transition to sustainable and secure energy for light vehicles in the UK” from the Energy Technologies Institute.  I wish I could be more positive, because I think that, in general, the ETI is trying to do good stuff; but this report, apparently the result of four years’ work, has been funded by entities including Shell, E-On and EDF (turkeys voting for Christmas, natch) and fails – for example - even to define ‘affordable’.  It would be harmless, but for the fact that it makes the genuinely effective and radical solutions seem impossible.

But it’s not impossible.  Entrepreneurship, indeed capitalism, is the means by which the supply side figures out how to give us what we, the demand side, want.

And I want cleaner air, and fewer people dying, in London. Soon.  Now.

So let’s just do it; slap them in the face with that fish.

No comments: