The UK government is making changes to red diesel (off-road diesel) taxation. From 1st April 2022 it is removing tax relief for red diesel for several industries – effectively a ban on red diesel for many of its current users. Therefore, from April 2022, the entitlement to use red diesel and rebated fuels will be far more restrictive than the current rules.
At Budget 2020, the UK government announced that it would remove the entitlement to use red diesel (gas oil) and rebated biodiesel for many sectors and applications, as of 1 April 2022. The move is intended to reduce the commercial use of red diesel, compelling a range of industries – including construction and leisure – to turn to other options such as unrebated white diesel or switch to cleaner alternatives.
From 1st April 2022, many sectors will lose their entitlement to use ‘red’ diesel and rebated biodiesel across a variety of applications – and construction is one of the industries that is most affected.
Red diesel is just ordinary ‘white’ diesel with a dye in it – but it is taxed at a much lower rate than white diesel. This rebated red fuel was introduced as a concession for certain industrial users in off-highway applications because fuel duty was mainly intended to be a tax on road vehicles.
Changes to this regime were announced by the UK government during Budget 2020 as part of the drive to achieve net-zero carbon emissions by 2050.
After the April 2022 deadline most current users of red diesel will have to switch to white diesel instead. Taxing most users at the full rate is intended to reflect the impact of the emissions they produce, while also promoting the use of cleaner alternatives.
One of the most significant changes is that heavy plant and equipment of all kinds, including NRMM (non-road mobile machinery, e.g. bulldozers and cranes), will no longer be permitted to run on red diesel when used for construction purposes. The construction industry will also be affected by the loss of eligibility to use red
diesel for heating and power generation on-site.
ElimiNOX Eco™ is well placed to help address the increased costs through the real world proven improvement in fuel efficiency returning 8-9% improvement.
While the total carbon footprint of HVO is considerably less than mineral diesel there are a number of reports that indicate CO2 emissions at the point of use are only 4-5% lower than mineral diesel.
ElimiNOX Eco™ is certified as compatible with all forms of diesel (petrol and kerosene), has demonstrated significant emissions reductions across CO2+ and will deliver 20%+ reduction in PM2.2 with HVO.
Which users are affected?
The government has published guidelines that specify who can still use red diesel and in which applications. One of the biggest changes for construction industry users is that heavy plant and equipment of all kinds will no longer be able to run on red diesel when used for construction purposes.
This includes all non-road mobile machinery (NRMM), including excavators, dumpers and cranes.
The construction industry will also lose permission to use red diesel for commercial heating and power generation, for example when using mobile generators on construction sites.
Certain industries that also use gas oil heavily, such as rail, agriculture, commercial fishing fleets and non-commercial heating or power generation uses, will be exempt from the April 2022 changes.
It’s worth noting that red diesel permissions apply only to the way in which equipment is used, not to the type of equipment itself. So, for example, NRMM that can be used for both agricultural purposes and construction purposes will still be able to run on red diesel, but only in an agricultural context.
Industries that will no longer be able to take advantage of red diesel include:
- Construction and road maintenance
- Logistics and haulage (including refrigeration units)
- Mining and quarrying
- Oil and gas extraction
- Waste management
- Commercial heating
- Leisure
- Airport operations and ports
- Manufacturing (such as ceramics, timber and steel)
HYDROTREATED VEGETABLE OIL (HVO)
Another member of the paraffinic fuel family, HVO is a drop-in liquid fuel alternative produced from vegetable fats and oils, such as cooking oil. Here, hydrogen – rather than methanol – is used as a catalyst, making HVO more clean-burning and ensuring a longer shelf life than regular (FAME) biodiesel. The HVO supply chain is currently being developed to ensure consistent high-quality, ethical supply, and expanded to support anticipated growth in demand. As the production process removes all Sulphur additional lubricity agents are required to avoid increased engine wear.
THE CONSTRUCTION SECTOR WILL LIKELY FEEL THE IMPACT OF THE RED DIESEL RULE CHANGES MORE THAN MOST.
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