In the UK from April 2022, red diesel will be available only to agriculture and the rail sector. Users of off-highway construction machinery will have to pay an extra 46.81 pence per litre for their diesel, paying the standard tax rate of 57.95 pence per litre rather than the subsidised red diesel rate of 11.14 pence per litre.
According to the Civil Engineering Contractors Association (CECA), losing the red diesel rebate could cost the UK construction industry between £280m to £490m a year.
Most construction plant runs on diesel; projects exploring alternatives, such as battery power and hydrogen, are still in their infancy. Therefore most plant hirers use red diesel – particularly those that hire out operated plant.
In many cases there are no readily available low-carbon fuels or construction plant that use alternative sources of energy, Switching to white diesel will significantly increase costs; and of course, those costs must be either absorbed or, more likely, passed on to the customer.
By their very nature construction sites do not have readily available power sockets. Provision of electricity at sites is usually provided by a proliferation of small portable diesel generators. Small generators have lower efficiency and lower emission controls than larger generators. They are dirty, noisy, and emit emissions which are both harmful to the environment and operators’ health.
All plant consuming road (white) diesel, red diesel or HVO can be treated with ElimiNOX Eco™ resulting in lower emissions and improving fuel efficiency.
A guidance note from HM Revenue & Customs confirms that from 1st April 2022, rebated diesel (known as red diesel) and rebated biofuels will no longer be allowed to be used as they are currently. It also confirms that biodiesels and hydrotreated vegetable oil (HVO) will be given no special tax treatment to encourage their use, even thought they cause substantially less pollution.
While the government says that it is keen to encourage the wider use of HVO as part of its move away from fossil fuels, HVO is currently about 10% more expensive than road diesel. And it’s taxed at the same rate. ElimiNOX Eco™ is proven to deliver an 8% improvement in fuel efficiency and deliver a 30% lubricity improvement addressing issues with HVO due to lack of Oxygen and Sulphur content.
Whilst HVO fuel is claimed to have a shelf life of up to 10 years compared to just 1 year for mineral diesel, which means there’s a significantly reduced need for regular testing and standing stock replacement. Currently, supply is limited, and not matching demand, with the new production plants scheduled to come online still some way off. As a result, finished fuel is having to be shipped long distances. Consequently, prices will remain at a premium compared to regular diesel, gas oil and kerosene.
Whilst a 90% cradle-to-grave reduction is greenhouse gas emissions is claimed, this is a controversial number: using land to grow fuel rather than food is leading to deforestation, which is said to be contributing up to 18% of global emissions. (from “How Bad Are Bananas” by Mike Berners-Lee (2020)) Additionally there are reports that show CO2 emissions at the point of use are in the range of 4-5% lower than mineral diesel.
Biofuels are likely to be a small part of the long-term solution to our energy requirements. HVO is probably a very good short-term alternative, but the urgency is hindered by a lack of immediate availability.