From April this year, the government restricted the entitlement to use red diesel and rebated biofuels in most sectors to meet climate change targets and become carbon neutral by 2050. But are more people using HVO and is it really beneficial for the environment?
What happened to red diesel?
Red diesel has mainly been used for off-road purposes, such as to power bulldozers and cranes used in the construction industry or to power drills for oil extraction. The government noted that it was responsible for around 15% of all the diesel used in the UK – which accounts for the production of nearly 14 million tonnes of carbon dioxide a year.*
During the period up to April 2022, a range of guidance was released to help sectors that were no longer able to use red diesel. Overall, the advice was to run down existing levels of red diesel and use up what was left before the April deadline. The guidance also suggested that those affected should move to either white diesel or a more environmentally friendly fuel source, such as HVO.
What is the current guidance?
Now that the April deadline has passed, other information has come forward about the illegal use of red diesel being a criminal offence. This includes moving red diesel from one tank to fuel another or if vehicles, tanks or machinery are found to contain red diesel or the red dye marker – in such cases, the fuel could be seized by the authorities. The overall consequences can result in prosecution, fines or jail time.
The Government noted that the removal of red diesel would only be negatively impacted in the short-term while businesses switch to white diesel or eco alternatives. In terms of long-term improvements, the Government added that business administrative burdens would be reduced for fuel suppliers, as there would no longer be the need to collect and report data to HMRC, as well as to collect and remit tax to them.
Moving forward, the new restrictions on the use of red diesel will be monitored by the Government using information from fuel duty receipts to evaluate trends in fuel usage. (More here.)
What are alternative options?
When comparing red diesel to white diesel, the two fuels are chemically identical and release similar levels of greenhouse gases when burned. The only real difference is the colour and the considerable difference in the tax rate. For example, when looking at January 2022, red diesel customers paid 11.14 pence per litre in fuel duty, compared with 57.95 pence per litre paid by white diesel customers.
However, many users are being encouraged to switch to more environmentally friendly fuels such as HVO. It’s a great alternative due to it being compatible with diesel engines and allows businesses to continue using existing machinery but more sustainably. HVO offers the user the ability to drive down their carbon emissions without going to the expense of purchasing new equipment and contributing to the Government’s climate change targets. However, there is some worry about running costs with those traditionally sitting around 10-15% higher than regular diesel.
What have we learnt about HVO fuel?
There has been a marked increase in the number of hire customers requesting HVO-compatible machinery due to certain sites having specific regulations that require emissions to be kept below certain limits. This is especially true of government contracts, for example, MHM’s solar and hybrid generators used HVO fuel on The Mall leading up to Buckingham Palace for the Queen’s Jubilee celebrations. Overall, this increased interest in HVO fuel and other green alternatives has yet to translate into sales – but this is expected to change as climate change initiatives begin to build.
On the other hand, articles are circulating suggesting that HVO fuel isn’t necessarily such a sustainable and environmentally positive option. This relates to some suppliers admitting to having palm oil and palm oil fatty acid distillate (PFAD) in their HVO fuel. While such producers have been up front about this composition, they have been reluctant to disclose the sources and production methods behind it.
But we have good news! Some suppliers, such as Crown Oil, work hard to ensure their fuel is good for the environment and does not contain palm oil, reducing net CO2 greenhouse gas emissions by up to 90%. MHM is proud to work with Crown Oil as we share the same environmental ambition for a more sustainable future.
In conclusion, HVO can make a positive contribution to achieving climate and environmental goals. However, it has been regarded as a more expensive option, though this needs to be reconsidered with the recent price hikes in diesel. While concerns have been expressed about the inclusion of palm oil and PFAD additives, it’s important to remember that HVO fuel is available without such additives.
If you require further product information, please contact us on 08081 689 099.
References: *https://www.gov.uk/government/publications/reform-of-red-diesel-entitlements/reform-of-red-diesel-and-other-rebated-fuels-entitlement