Zero-emission buses, particularly battery electric buses, will soon become standard for the vast majority of new mainstream local buses operating in Scotland. This will contribute to Scotland’s ambitious climate target of net zero by 2045.

This study explored how a move to battery electric buses (BEB) might impact the second-hand bus market, new buses, big and small operators in Scotland. It also discussed different ways of managing the transition with government and stakeholders.

The current market

The study found that the current market displays the following features:

• The sale of new buses in the UK and Ireland has been in decline for over a decade. This means that even without the introduction of BEBs, the structure of the second-hand market will change due to reduced supply and increased prices.
• Small local bus operators are just as likely to invest in new buses as large bus operators.
• Buses transition from routes that make more money to routes that make less money over their lifetime. The definition of high-earning route is different for different sizes of bus operator.

Challenges and solutions in the new bus market

We found that the main challenges for introducing BEBs in the new bus market are limitations in driving range, the high cost of these buses and uncertainty around the lifetime of batteries.

To overcome these challenges, we think operators of new buses could take the following steps:

• Delay investment until buses with bigger battery size are available.
• Use buses with smaller battery sizes but rely on opportunity charging.
• Put new BEB only on shorter and/or less frequent routes that are compatible.
• Deploy hydrogen fuel cell electric buses (out of scope for this study).
• Consider new business models where batteries are leased to bus operators.

Implications for the future second-hand bus market

No one strategy will be effective for everyone and a mix of the above approaches is likely. These approaches affect the second-hand bus market in the following ways:

• Decreased supply of second-hand buses as new bus investment is delayed
• A trend towards buses with very large batteries, which are over specified for the needs of many second-hand bus operations and are therefore more expensive than necessary
• Reliance on opportunity charging, which might only be feasible where many bus routes come together; this may leave long-distance interurban routes without an immediate battery bus solution
• Leased battery models could reduce bus lifetime or increase bus costs in later life

The transport sector presents Scotland’s biggest challenge to decarbonisation, with emissions increasing each year since 2010. In 2016, transport (including aviation and shipping) contributed 37% of Scotland’s total greenhouse gas emissions. However, Scotland has shown strong ambition in this area. When this research was completed in March 2020, the Scottish Government had pledged to remove the need for new petrol and diesel vehicles by 2032, a target it subsequently said it would bring forward to 2030 in its Climate Change Plan update of December 2020.

To help Transport Scotland develop interventions, this report has: identified the economic impacts; developed a detailed framework to assess them; and used the outcomes to highlight the implications for policies to smooth the transition to ULEVs. 

We have concentrated on a scenario, prepared by Element Energy, which comes closest to meeting Scotland’s climate change targets. This scenario achieves the 2040 and 2045 targets, and almost meets the 2030 target.

Findings

In this scenario, the overall economic impacts are positive over the long term:

• Gross Value Added (GVA) is higher in this scenario than in the baseline (in which ULEV deployment remains in proportion with that which occurred in 2018 in Scotland) across all years from 2027 to 2050.
• In the short term, GVA is lower for two main reasons: higher investment costs and the high price of ULEVs (relative to internal combustion engine vehicles (ICEs)) which reduces consumer spending in other areas.
• Total economy-wide employment (on a full-time equivalent basis) is higher by 2043 reaching a net gain by of 2,700 jobs by 2050 but is below the baseline for most of the period.
• ICE maintenance jobs are most at risk from the transition to ULEVs. The framework shows that more than 10,000 ICE maintenance jobs could be at risk by 2050 as ULEV powertrains have different maintenance requirements. The jobs at risk are likely to be distributed widely across Scotland, reflecting the geographic distribution of maintenance garages.
• The oil and gas industry also faces significant job losses. We estimate around 4,000 of the 30,000 people directly employed in the oil and gas sector in Scotland are at risk of losing their jobs. This will have a particularly acute impact in Aberdeenshire where most of these jobs are located.
• Up to a further 2,500 job losses could be lost at refuelling stations, partly because many ULEVs will often be charged from home.
• There is potential for the creation of around 3,000 new jobs in the production of ULEVs, drawing on Scotland’s extensive expertise in electrical engineering. In particular, there appears to be an opportunity in developing low-emission heavy-duty vehicles (HDVs). Our analysis suggests a further 500 jobs could be created at companies installing and operating ULEV infrastructure.

 The scenario also suggests substantial environmental benefits:

• CO₂ emissions are reduced by 113m tonnes or 49% cumulatively over 2020-2050, from 232m tonnes to 119m. These can be monetised to show a total annual net benefit of £1.076bn (not discounted) in 2050.
• Improvements to air quality from the annual reduction in tailpipe emissions of NO_x and PM2.5s are estimated to reduce annual damages to human health by the equivalent of £335m in 2050 alone.

Scotland’s new Climate Change Act commits Scotland to a target of achieving net-zero emissions by 2045. This is amongst the most stringent climate targets in the world. Emissions from Scotland’s transport sector (including aviation and shipping) contributed 37% of Scotland’s total greenhouse gas emissions in 2017.

A rapid increase in the number of electric vehicles on our road is one part of Scotland’s plan to cut emissions from the sector. Scotland has consequently shown strong ambition in this area, with the Scottish Government pledging to phase out the need for new petrol and diesel cars and vans by 2032.

However, meeting this ambitious goal will require a rapid shift in purchasing behaviour amongst both private and company vehicle buyers. To achieve a full transition to ultra low emissions vehicles (ULEVs), it is critical to understand the specific challenges and needs that different car, van and HGV buyers face to develop targeted policies.

The aims of this study:

• Identify the barriers that currently exist to ULEV uptake.
• Segment Scottish car, van and HGV buyers by the specific barriers each one faces.
• Make recommendations to overcome these barriers and maximise the economic opportunity for Scotland.

This report has made recommendations in order to address the identified barriers to ULEV uptake.

Some of these recommendations are:

• Review ULEV purchase incentives in 2020 when Plug-in Car and Van grants are due to be revised. Purchase incentives should look to close the gap in upfront cost between ULEVs and conventional vehicles, but overall value to buyers should reflect the difference in overall ownership cost
• Support development of services for fleets and consumers which can show suitability for ULEV adoption and potential cost savings e.g. telematics systems.
• Signal to manufacturers that Scotland is primed for ULEV uptake e.g. building out public charging network, training garages in ULEV maintenance. 
• Continue to develop rapid charging network, including extending coverage to minor roads, increasing charge rates and improving reliability. Mobile charging solutions (e.g. BP FreeWire) could be used to test viability of rapid charge points in new locations.
• Launch a communication campaign to combat ULEV misconceptions and provide clear advice on options for ULEV purchase.