Instead, it intends to use its £40m budget in other areas, including a marketing campaign to promote the benefits of cleaner vehicles to consumers and to reward companies that develop green transport policies.
The PowerShift programme stalled 14 months ago when the EU said the grants could infringe European free competition rules because not all carmakers were competing.
Stephen Ladyman, minister of state for transport, believes the Government needs to promote the cleanest cars in each class and work with industry to bring more efficient cars to market.
General Motors says the decision does not change its plans to press ahead with Saab biofuel. It has sold “double figures” since UK launch in March. GM has no plans to re-enter the LPG market. “We believe Saab biofuel is the way ahead for us now we have been out of the LPG market for so long,” says a GM UK spokesman.
GM is allowing Saab to take the lead on future fuels with its BioPower cars. One advantage is that the cars can run on 100% unleaded if a bio-pump is not available and storage space is not lost to an additional tank, as happens with LPG.
The UK government has cut fuel duty by 20% on bioethanol. Also, bioethanol E85 (15% petrol, 85% produced from crops) promises a 20% gain in power, with a 70% reduction in emissions.
Morrisons opened the first E85 pump in Norwich, selling 2p per litre cheaper than unleaded and plans a network. The UK’s first bioethanol plant is at Wissington in East Anglia.
“Until non-fossil fuel hybrid and fuel-cell vehicles become widely available, bioethanol is an accessible means of achieving sustainable development,” says the GM spokesman.