It is welcome news that UK Government has dismissed reports that it was considering a scrappage scheme for petrol and diesel cars as a short-term economic stimulus measure. In a typical scrappage scheme, the government would pay car owners to scrap their current vehicle in return for credit against a new one, thereby stimulating the manufacturing sector. However, scrappage schemes are generally not a desirable policy, because they tend to be an inefficient use of public funds, work against the grain of transport decarbonisation, and send mixed price signals alongside Electric Vehicle subsidies.

The Coronavirus has challenged all sectors of the UK economy, and electricity markets have been no exception. Electricity demand is down by as much as 20%, causing periods of negative electricity prices and unprecedented strain on the Electricity System Operator (ESO), run by National Grid. The ESO is responsible for ensuring that the system can respond to lightning strikes and faults at power stations, and that power lines don’t become overloaded. To do this, the ESO takes “balancing actions”, paying to turn down some generators and paying to turn up others.