On 4 February 2008, the first UK-based Low Emission Zone ("LEZ") was introduced in Greater London. LEZs, which have been implemented across numerous European cities, are likely to have a significant effect on businesses located in major urban areas, especially within the transport sector. Furthermore, the arrival of LEZs illustrates a growing shift in how climate change law and policy is decided; with cities and local authorities taking the lead in pursuing environmental initiatives, in addition to, or perhaps even instead of national governments.
LEZs: the basics
LEZs are defined areas within major cities and urban conurbations in which only vehicles that meet specific exhaust emission standards or criteria are allowed to enter. Vehicles with particularly high emissions are either barred from entry or charged a fixed fee per day for such entry. Predominantly, LEZs affect heavy duty goods vehicles, lorries and most buses or coaches, although some schemes in continental Europe also affect vans, cars and motorcycles.
The principal policy objectives for LEZs are to create an environmentally-friendly metropolis and ultimately improve the health of inhabitants and residents. LEZs are expected to reduce emissions of toxic substances and assist in ensuring that air quality standards are met. Moreover, traffic congestion and noise pollution will be eased and reduced respectively. Aside from reducing these health hazards, LEZs will also contribute to reducing greenhouse gas emissions from road vehicles: through reducing the use of older and more polluting vehicles and stimulating improvements in fuel efficiency by way of modern vehicle technology and advancing the introduction of abatement equipment.
LEZs operate by imposing a charge on, or restricting entry of, defined vehicles that do not meet specified standards of emissions. The standards by which vehicle emissions are tested are set down by the Euro Standards classification of vehicle emissions, which sets limits for CO2, NOX and particulate matter. These standards exist to ensure that new vehicles produced are cleaner by setting tighter standards for a four to five year period going forward.
The London scheme
In London, the LEZ targets lorries, buses, coaches and similar vehicles, and is to be extended in future years to include vans, minibuses and taxis. Cars and motorcycles will not be affected by the scheme.
Since 4 February 2008, diesel-engine lorries over 12 tonnes Gross Vehicle Weight (GVW) and buses and coaches over 5 tonnes GVW were required to be at a Euro III standard. This Euro III standard will also apply to lorries between 3.5 and 12 tonnes GVW from July 2008 and to larger vans and minibuses from October 2010. Finally, from January 2012, lorries over 3.5 tonnes GVW and buses and coaches over 5 tonnes GVW must meet the Euro IV standard.
Operators of targeted vehicles that do not meet these standards (or qualify for an exemption) must pay the daily charge of £200 per vehicle to Transport for London. This charge is applicable for each day the vehicle is driven within the zone and does not meet the for a penalty charge on top of the fixed fee. The system is enforced by fixed and mobile cameras which check a vehicle's registration number plate against a database of registered vehicles which meet the emissions standards and are therefore exempt from the charge or are registered for a discount. If the vehicle is not so registered as meeting the standards then the daily charge will be payable.
A further expense to consider: what does this mean for businesses?
LEZs will have an enormous effect on vehicle operating businesses within affected cities, particularly for haulage and transit firms. Under the London scheme, the number of vehicles affected is potentially very high as a large proportion of national transit fleets pass through Greater London at some point during a year. The replacement of vehicle fleets may also be accelerated as LEZs primarily target older and more polluting vehicles. Accordingly, LEZs may have the greatest effect on smaller operators who typically have older vehicles and less capital to modify or change their fleet.
So what are the options for affected businesses?
Instead of paying the daily charge for each day a non-compliant vehicle drives within the relevant zone, a business could, as one option, purchase a number of compliant vehicles (either new or second hand). For larger national fleet operators, modern compliant vehicles could be transferred to London-based routes while older vehicles (which do not meet the emissions criteria) are displaced elsewhere.
Another alternative is to fit relatively low-cost equipment to improve vehicle emissions, for example:
- fitting pollution abatement equipment or exhaust treatment systems such as a diesel particular trap or filter to substantially reduce the amount of PM10 emitted from an exhaust;
- converting the vehicle to an approved alternative fuel such as compressed natural gas; or
- installing a new compliant engine.
Such modifications must be approved to ensure that the required emission standards are achieved. Transport for London will accept vehicle modifications only if they have been certified by an approved body such as the VOSA. After a successful test, VOSA will issue either a Reduced Pollution Certificate or a Low Emissions Certificate depending on the modification implemented.
The wider picture: cities going it alone
The relatively recent introduction of LEZs in cities across Europe may signal a shift in how climate change policy, and thus eventually law, is created (or at least conceived of at an early stage). The European Energy Commissioner Andris Piebalgs has even proclaimed that "cities are becoming the places to deliver new ideas and innovative projects against global warming". In reality, it mirrors the coalition of states in the US which have promoted policy at a local level.
LEZs are an example of regional authorities autonomously introducing legally-binding programmes to combat localised environmental problems. As a consequence, rather than national governments leading climate change policy, it appears that initiatives are pioneered in towns, cities and local authorities; with national law eventually having to harmonise on a countrywide scale.
For instance, the legal basis of London's LEZ stems back to the Greater London Authority Act 1999 ("Act"), under which the GLA has the power to do anything to promote the improvement of the city's environment. Moreover, the Act obliged the Mayor of London to publish the Air Quality Strategy in September 2002, which suggested that a LEZ could accelerate the introduction of cleaner road vehicles.
This should assist the development of clean technology by creating an incentive for increased R&D into pollution-reduction technologies. Businesses that do not adapt by embracing new technologies will be at a competitive disadvantage owing to a shift in the market favouring cleaner vehicles.
It should also be noted that the European Commission recently launched the Covenant of Majors after informal consultation with numerous cities across Europe. This Covenant requires adhering cities to commit to go beyond European Union targets for reducing CO2 emissions, through renewable energy and efficiency actions. This result-orientated initiative acknowledges that cities are the places to find cross-sectional solutions to climate change, "where the necessary conciliation between private and public interests may be found".
The arrival of LEZs and similar initiatives have propelled cities into becoming leading actors for implementing climate change policy. Therefore, businesses should keep an eye on the latest proposals from cities and local authorities as such projects may foreshadow future laws on a national, European or even global scale.
 Approximately 610 square miles.
 Including Berlin, Cologne, Dortmund, Eindhoven, Gothenberg, Hannover, Malmö, Rotterdam, Stockholm, Stuttgart and Utrecht.
 Or alternatively known as 'environmental zones', 'umweltzonen' (Germany), 'milieuzones' The Netherlands), 'Lavutslippssone' (Norway), 'Miljozone' (Denmark) or 'Miljözon' (Sweden).
 Including high concentrations of carbon monoxide (CO), fine particles (PM10) and nitrogen oxide (NOX).
 Vehicles registered as new on or after 1 October 2001 are assumed to be of a Euro III standard while vehicles registered as new on or after 1 October 2006 are assumed to be of a Euro IV standard.
 Other specialist vehicles must also be at this standard including motorised horseboxes, recovery vehicles, refuse collection vehicles, snow ploughs, gritters, road sweepers, concrete mixers, tippers, removal lorries, fire engines, extended-cab dual purpose pickups and light utility vehicles (Section 4, Schedule to the Greater London Low Emission Zone Charging Order 2006 and Annex 2 to the Scheme).
 The following vehicles are exempt: vehicles designed and built for mainly off-road use but which may use the road for limited purposes (such as agricultural tractors, mowing machines and mobile cranes), historic vehicles registered with the Driver and Vehicle Licensing Agency (DVLA) before 1 January 1973 and military vehicles (Section 4, Schedule to the Greater London Low Emission Zone Charging Order 2006 and Annex 2 to the Scheme).
 From 4 October 2010, the charge will be reduced to £100 for large vans, horseboxes, motorcaravans and minibuses (Section 8, Schedule to the Greater London Low Emission Zone Charging Order 2006).
 Charges apply every day of the year including weekends and public holidays (Sections 6 and 7, Schedule to the Greater London Low Emission Zone Charging Order 2006).
 For lorries, buses and coaches, this will amount to £1000 per day (although will be reduced to £500 if paid within 14 calendar days but increased to £1500 if not paid within 28 calendar days). For large vans and minibuses, this will amount to £500 per day (although will be reduced to £250 if paid within 14 calendar days but increased to £750 not paid within 28 calendar days)
 The database is compiled using data from the DVLA, the Vehicle Operator Services Agency (VOSA), the Society of Motor Manufacturers and Traders (SMMT) and operators who register directly with Transport for London.
 Andris Piebalgs, European Energy Commissioner, speaking at the presentation and launch of the Covenant of Mayors in Brussels on 29 January 2008
 Greater London Authority.
 Section 30, Greater London Authority Act 1999.
 Section 362, Greater London Authority Act 1999.
 Cities that have expressed an interest to join the Covenant of Mayors include Belfast, Berlin, Birmingham, Bonn, Brussels, Cork, Copenhagen, Helsinki, London, Lyon, Madrid, Manchester, Milan, Nantes, Paris and Rome.
 Andris Piebalgs, European Energy Commissioner, speaking at the presentation and launch of the Covenant of Mayors in Brussels on 29 January 2008.