Euro 5 budget ‘incentive’ fails to deliver real saving for truck operators

An incentive announced by the Chancellor in last month’s budget billed as benefiting early adopters of Euro 5 trucks fails to take account of the costs of compliance for SCR-equipped vehicles.

That’s the view of CAP commercial vehicle expert John Watts, who argues that the much touted Vehicle Excise Duty saving of up to £500 will be largely swallowed by the costs of the necessary increased dosage of AdBlue.

And when the potential additional capital costs of purchasing a Euro 5 truck, compared with Euro 4, is factored in the promised saving is likely to be wiped out entirely.

Watts looked behind the headline figures and compared the need for AdBlue dosage in Euro 4 and Euro 5 vehicles at today’s prices. Based on his calculations a rise to an average 44 pence per litre in the price of AdBlue would reduce the £500 VED saving incentive offered by the Chancellor to zero.

Watts said: “Like a number of the other supposedly green incentives in the recent budget this one fails to stand up to scrutiny. It seems at best that this has either been ill thought through, or at worst represents a superficial and cynical ‘box ticking’ exercise to enable the Government to claim it is proactively encouraging truck operators to go greener.”

SCR Euro 5 requires increased dosage of AdBlue, representing an additional two per cent of fuel usage.

Based on an average annual mileage of 100,000 for a 44 tonne tractor, returning an average eight miles per gallon, fuel usage stands at 12,500 gallons (56,750 litres). AdBlue dosage for Euro 4 compliance is around four per cent, or 2,270 litres, while to meet Euro 5 standards dosage rises to about six per cent, or 3,405 litres – a 50 per cent increase.

Assuming an average bulk purchase of AdBlue at today’s price of approximately 35 pence per litre this represents an additional cost of £375 – leaving the supposed incentive of a £500 VED reduction reduced to £125. This would be wiped out entirely if AdBlue costs rose to 44 pence per litre.

Watts added: “Even if average diesel consumption is ten miles per gallon the immediate saving is still only £200 per year and none of these calculations take account of any additional capital costs resulting from the purchase of a Euro 5 truck compared with a Euro 4 version.

“The majority of early Euro 5 registrations are likely to be SCR vehicles, until MAN and Scania offer Euro 5 EGR in the UK, so it seems that the Chancellor’s supposed Euro 5 adoption incentive fails to achieve what was claimed at the time.”