The UK Government has been urged to accelerate the transition away from red diesel by supporting the construction industry’s commitment to genuinely lower carbon fuels.
Due to the Government aiming to accomplish “Net Zero” industries, like construction will need to find green alternative fuels. As of April 2022, construction companies will no longer be able to take advantage of the rebate on red diesel.
Additional burden to a struggling industry
With limited alternatives available this hike will not reduce carbon emissions as companies shift to normal ‘white’ diesel. However, this will be an additional burden on already struggling construction firms. By hampering their ability to deliver the infrastructure we need which could ultimately close some construction companies.
A Civil Engineering Contractors Association (CECA) member survey found that the new rules will cost each SME construction firm between £250,000 and £600,000 per year with nearly half of the businesses worried about their ability to continue.
Lower carbon alternative fuels are readily available, including some hydrogenated vegetable oil like our very own HVO. However, from April 2022 they will also be taxed at full rate. This will act as a barrier to uptake as a lower-carbon alternative.
Industries call for incentives to switch to green fuels
CECA director of external affairs, Marie-Claude Hemming, said: “While the Government has legislated to remove the tax rebate on construction’s red diesel use, it has also removed any incentive for greener fuels.
“This policy increases tax revenues but no longer provides the option to choose lower-carbon alternatives in the first instance.
“CECA believes that in order to meet environmental goals, genuinely lower carbon fuels should be exempt from the same tax levels as standard fuels.”
“Our members recognise their responsibility to protect the environment for future generations. We are keen to work with Government and fuel suppliers to ensure that genuinely lower-carbon fuels are used across the whole of the construction industry, helping us build and maintain the modern and reliable infrastructure we need.”
Oilfast is here to support the construction industry through its transition from red diesel to greener fuels. Our industry experts are on hand to help run through companies’ options.
