Decarbonising Retail Logistics: How the UK’s HGV Emissions Consultation Will Reshape Supply Chains?

The UK Government has launched a consultation to accelerate the transition from non zero-emission heavy goods vehicles (HGVs) to zero-emission HGVs (ZE-HGVs). Opened on 6 January 2026 and closing 17 March 2026, the consultation supports the Government's ambition for all new HGVs to be 'zero-emission' by 2040.

The Government is seeking views on whether to exclude from the scope of new regulations vehicles that are covered by the 'Non-Zero-Emission Van Registration Trading Scheme' (being vehicles with a gross vehicle weight between 3.5 and 4.25 tonnes), as well as coaches and trailers.

Three regulatory options are under consideration:

Option 1 – Strengthened CO₂ Standards

New legislation based on the existing EU legislative framework would mean that manufacturers would have to comply with strict CO₂ reduction targets with the ultimate aim of phasing out non-zero emission HGVs by 2040. Compliance would be based on fleet-average emissions, with the possibility of those manufacturers that only account for a small portion of new HGVs registrations to be exempt from the obligation to comply. The Government anticipates that initially, improvements may come from making existing non-zero emission HGVs more efficient than investing in newer (e.g. battery powered) HGVs, which would be counterproductive.

Option 2 – ZEV Mandate

A Zero-Emission Vehicle (ZEV) mandate would require manufacturers to reduce diesel sales and increase ZE-HGV supply. Annual allowances for non-ZE sales would shrink over time, with penalties for non-compliance. This is similar to the existing ZEV mandate, which has recently come under criticism, with the industry calling on the Government to bring forward from 2027, the planned review of the mandate. Compliance with any ZEV mandate would depend on the demand by the end customers of particular types of vehicles and could force manufacturers to offer significant (and potentially unsustainable) discounts to attract interest.

Option 3 – Fleet Adoption Requirements

Large operators, including retailers, could be required to adopt a minimum share of ZE-HGVs, with exemptions applying to SMEs, due to the disproportionate costs of complying with such a mandate. Within this option, the Government is considering two options: (i) either targeting a particular share of the operator's entire fleet that needs to be ZE across a period or (ii) a proportion of vehicles added to an operator's goods' licence to be ZE.

As with the other two options, there are concerns around the impact of this option on smaller operators and the availability of sufficient vehicles to achieve the targets imposed.

Retail sector in focus

Several retailers (such as Tesco and Amazon) are already working on electrifying their fleet (HGVs and non-HGVs), as part of the pursuit of their net-zero objectives. The British Retail Consortium has identified low-carbon logistics as one of the five pathways to achieving the targets set as part of its "Climate Action Roadmap". In this context, the consortium has set a target of achieving 100% zero carbon last mile logistics and 100% zero carbon HGVs by 2035 and has called for the Government to "set a clear direction to accelerate the deployment of zero carbon HGVs for UK market".

We anticipate that this consultation will be welcomed by the retail sector, as a clear signal on the Government's direction of travel.

Combined with this, recent technological advances mean that ZE‑HGVs already meet or exceed typical daily trunking distances. Costs are also softening and the rapid expansion of the EV charging network, is able to alleviate range anxiety. The transition also supports the carbon reporting requirements and would allow early adopters to differentiate themselves from the market, whilst at the same time ensuring that retailers stay ahead of anticipated regulatory change.

The consultation is open until 17 March 2026, and this is a critical window for retailers and logistics operators to influence public policy. Responding effectively can help shape regulations that work for your business model and supply chain.

We are working with a number of companies operating in the electric vehicle space, both as suppliers of services and as end-customers and are familiar with the legal and practical issues that arise in the delivery of an EV strategy. If this is one of your areas of focus in 2026, please get in touch with our experts to discuss.