Professor Michael McMahon:

The approach taken is based on milestones and failing to hit these milestones requires a member state to put this money aside into the EU funds. The more we do and the sooner we do it the less we face those costs. The direct bottom-line budgetary implication of not taking action is the cumulative €3.5 billion by 2030. I do not want to say that this is the maximum it could be as I have heard other people who are more pessimistic on what will be achieved by 2030. Then the numbers get bigger. The further we are from the targets the larger the amount we would have to put away. That is part of it and is the cost of non-compliance.

There is another cost involved. It is the clearest one for us to model, namely, that relating to electrification. There are also the costs relating to the loss of vehicle registration and excise taxes. I do not want to be pessimistic about that. If we are successful and we do a massive electrification of the vehicle stock, in some ways this is good because it helps avoid non-compliance costs. There is a sort of good news in there, but then there is the question of what will be the mechanism we use to fill the gap that will be left. I have sat in front of this committee over many years and pointed out a very obvious thing; if there is a gap in the budget that needs to be filled, then either spending on other things that we like spending on must be cut or taxes must be raised in other areas to fill the gap. This is the kind of obvious choice to do this in a sustainable way.