Motorists are to be given up to £5,000 to buy less polluting electric cars in a long-awaited official drive to a low-carbon future.
Under the £250m incentive scheme, drivers will receive Government subsidies to buy a new generation of cars that can be charged up by normal power sockets in homes and garages.
Ministers promised that the funding – first announced as a concession for approving Heathrow's third runway in January – would make green cars practicable for everyday drivers.
"Cutting road transport CO2 emissions is a key element of tackling climate change. Less than 0.1 per cent of the UK's 26 million cars are electric, so there is a huge untapped potential to reduce emissions," said the Transport Secretary Geoff Hoon.
"The scale of incentives we're announcing today will mean that an electric car is a real option for motorists as well as helping to make the UK a world leader in low-carbon transport."
Opposition politicians and transport and environmental campaigners gave the plan, revealed by the Prime Minister in The Independent last week, a lukewarm welcome, accusing the Government of doing too little too late to move to reduce greenhouse gas emissions from petrol and diesel cars.
Britain has agreed to cut CO2 emissions by 80 per cent by 2050. The Climate Change Committee, an independent body established under the Climate Change Act to advise the Government on setting carbon budgets, has recommended an initial 42 per cent cut by 2020. The committee is chaired by Lord Turner of Ecchinswell – Adair Turner, the former director general of the Confederation of British Industry.
Launching the programme at Knockhill Racing Circuit in Fife, where he drove an electric Mini, Lord Mandelson, the Business Secretary, said: "Britain has taken a world lead in setting ambitious targets for carbon reduction. Low-carbon vehicles will play a key role in cutting emissions."
He added that the Government money would spur British industry to invest in low-carbon technology.
In the past two years the Government has committed £123m towards research and development into low-carbon technology and £20m to encourage local authorities and the Royal Mail to run electric vehicles. Under its new £250m scheme, which will take effect from 2011, the Government will back "plug in" cars, rather than existing hybrid models such as the Toyota Prius.
Most of the money – £230m – will provide motorists with grants of between £2,000 and £5,000 to buy wholly electric and hybrid cars. A further £20m will fund charging points in two or three "electric cities", making longer journeys feasible.
Ministers hope that the scheme will go a long way to tackling the limited range and high cost of electric cars. At present there are few electric-only models available, the most popular of which is the G-Wiz, which must be charged every 75 miles and has a top speed of 51mph. But over the next year, new models from Mini and Smart – and a plug-in Prius – are expected.
According to statistics from the Department for Transport, of the 28 million cars on Britain's roads in 2007, the latest year for which figures are available, just 2,000 were electric and 16,000 hybrid. The new scheme would fund around 65,000 new electric cars – more than three times the existing number, but still only 0.3 per cent of the total.
Motoring organisations warned that the infratrastructure for electric cars would have to transformed to make them viable. "For electric vehicles to revolutionise our cities we need infrastructure, incentives, clean electricity and affordable, practical vehicles," said the AA's president Edmund King.
While welcoming the new funding, motor traders and manufacturers called for Government support to ensure that the beleaguered car industry remains intact during the downturn and can build more energy-efficient cars when the economy improves.
They also called for motorists to be offered incentives to scrap older, polluting cars and buy new ones. A similar scheme has recently been successfully introduced in Germany, and a version may form part of the Chancellor Alistair Darling's Budget next week.
Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: "The motor industry is in the middle of its greatest economic challenge and immediate action to preserve the UK sector in the short-term is essential if we are to stake our claim in the global development of low-carbon technology for the future."
Opposition politicians responded to the latest announcement by claiming that they would take tougher action to reduce transport pollution. The Conservatives pledged to build a national network of electric charging points, improve the national grid to cope with extra demand from electric vehicles, and divert £200m from road charging into other green transport schemes.
In a speech on green technology yesterday, the shadow Chancellor George Osborne complained that Britain was lagging behind Germany, France, Japan and the US. "Instead of leading the world on green technology, Britain is trailing far behind. So we must all take the Prime Minister's latest announcement on electric cars with a pinch of salt."
According to the Liberal Democrat Transport spokesman Norman Baker, the announcement was like adding "a small dab of green paint to the rusty hulk of the Government's failed transport policy". He said: "Discounts on electric cars are all very well for those who can afford to buy a new car but it cannot hide the fact that the Government has forced up rail fares and destroyed many local bus services."
At the request of The Independent, the Campaign for Better Transport suggested another way of spending the Government's £250m. It proposed allocating £100m for buses, trebling the Rural Bus Subsidy Grant, £50m for 15 sustainable travel towns, £50m for another 50 train carriages spread across the 10 most congested lines, £30m for 50,000 cycle stands, and £20m for car clubs at new developments and workplaces.
Its climate change and roads campaigner Richard George said: "While electric vehicles have a role to play in reducing transport's carbon footprint, we're still waiting to hear how the Government plans to provide enough green energy to make this an environmental initiative. Throwing £5,000 at people to buy a new car feels more like a bail-out for the motoring industry than the sustainable transport strategy we need."
The green cars
The market leader. Its fragility was revealed by a Top Gear crash test. Seating for two adults and two small children. Old-fashioned batteries in the £8,500 version give a 40-mile range and 50mph top speed. A more advanced £15,000 version will travel 70 miles and can be recharged in 90 minutes.
The E sacrifices two seats to the battery stack. Performance is brisk – this Mini will reach 62mph in 8.5 seconds and go on to 95 mph. It has a range of 150 miles. Some 500 have been supplied on lease to customers in California and New York at $850 a month. Made in Oxford and Munich, 40 may be leased in the UK, says Mini owner BMW.
A version of this, the Vauxhall Ampera, should follow the Chevy's launch in the US in 2011. As a "series plug-in hybrid" it generates its own electricity as well as taking it from the mains, and uses a small petrol motor to power items such as air conditioning. Healthy UK demand will help the case for making it at Vauxhall's Ellesmere Port works. Practical, but range still limited to 40 miles.
Smart Fortwo EV
Currently undergoing trials, it may go on sale next year. Expect a top speed of 70mph, a range of 70 miles. Price to be determined.
Lotus helped develop this sexy model, which hits 60mph in a Ferrari-bashing 3.9 seconds and has a range of 250 miles. The snag? Its price – £96,000. It is available to order now; UK deliveries next month. Tesla are also said to be planning a saloon.
Aixam Mega City
This is a French take on the concept and has similar performance to the basic G-Wiz. It's conventional rather than stylish, and the finish is a little rough. Available as a two- or four-seater.
Reviews by Sean O'Grady