Considering vehicles powered by alternative fuels
Whether you are running a fleet or just your own vehicle, you can use cleaner fuels and vehicles which have less environmental impact and help lower your fuel costs. Some vehicles powered by alternative fuels or electricity produce less CO2 and air pollutants than those that run on petrol or diesel. They may also be subject to lower taxes such as vehicle excise duty. See the page in this guideline on tax breaks for low-emission vehicles.
Types of alternative fuel and vehicles include:
- Liquefied petroleum gas (LPG) - vehicles which run on LPG cost around 30 per cent less to run than those powered by petrol and approximately the same as diesel. They produce around 10 per cent less CO2 than petrol vehicles but slightly more than diesel. LPG vehicles emit significantly less air pollutants than diesel vehicles and similar to petrol vehicles. Drivers of LPG-powered vehicles may be able to claim lower company-car tax rates.
- Natural gas - vehicles powered by natural gas (methane) produce significantly less CO2 than petrol vehicles, and similar or slightly less than diesel vehicles but with lower emissions of air pollutants.
- Biofuels - transport biofuels are a renewable alternative to limited fossil fuels. They can be liquid or gas and can help you to reduce your business transport emissions. How much biofuels reduce CO2 emissions will depend on where they come from and the way they are produced. See our guideline on biofuel for transport.
- Hybrid vehicles - these are powered by electricity and either petrol or diesel. They recharge their batteries during normal operation. The electric motor can be used for short journeys and the engine can be used for longer journeys, to maximise efficiency. This means less fuel is burned so CO2 emissions can be reduced and fuel costs are around two-thirds that of an equivalent petrol-only vehicle. Hybrids are also eligible for tax breaks, such as lower vehicle excise duty.
- Electric vehicles - these produce no direct exhaust emissions, but there is still an environmental impact from the generation of electricity. You can reduce this by purchasing electricity generated from renewable sources. Vehicles run on electricity are also given many tax breaks.
While there are potential benefits to using alternatively powered cars, including cost savings and reduced environmental impact, you should check how easily vehicles can be refuelled before you purchase them.
Although alternatively powered vehicles may initially be more expensive than diesel or petrol-fuelled models, they are likely to provide long-term cost savings in fuel consumption.
You may be able to take advantage of the ultra-low carbon cars grant. See the page in our guideline about on tax breaks and grants for low-emission vehicles.