With the red diesel subsidy changes implemented in April 2022, some businesses are having to find an alternative fuel. George Webb, Liquid Gas UK CEO, explains what the changes actually mean, and how businesses can adapt and look to alternative fuels to replace red diesel use.
How has the red diesel subsidy changed?
In a bid to reduce greenhouse gas emissions to net zero by 2050 and to combat air pollution, UK government removed the entitlement to use red diesel and rebated biodiesel for most sectors and applications.
Before the subsidy change, red diesel could be used in vehicles and machines other than road going vehicles with a reduced or ‘rebated’ rate of duty. It could also be used in certain commercial heating and power generation.
Now the law has changed, rebated fuel use is limited to certain types of vehicles, machines, and appliances where the fuel is used for specific purposes only. For example, amateur sports clubs and golf courses are allowed to use red diesel for grounds maintenance as well as the heating and lighting of the clubhouse and changing rooms. To qualify, amateur sports clubs will need to be registered as community amateur sports clubs (CASCs).
What impact will these changes have on businesses?
Not all sectors will be affected. The changes will mainly impact the construction and road maintenance, mining and quarrying and manufacturing industries, with heavy construction equipment and commercial heating and power generation no longer permitted to use red diesel. This means construction plant-hire companies, and developers who use them, can only use white diesel or duty-paid biofuels to fuel machinery.
Businesses also need to be aware that red diesel can no longer be used for waste management, commercial heating and leisure purposes.
Any vehicles, machines or appliances found unlawfully running on rebated fuel will be liable to be seized. This means it’s important to ensure a proper paper trail of invoices and receipts are kept, proving full duty was paid on diesel after the date the rules changed.
The role of LPG when red diesel isn’t an option
The subsidy change was brought about to incentivise those using red diesel to switch to lower carbon alternatives, such as LPG and bioLPG, as well as encourage the use of more energy efficient vehicles, machinery and appliances.
LPG can help make significant savings when compared to paying for unrebated diesel, as it is around 40% cheaper[1]. It is also the ideal solution for sites that are off the gas grid and for applications that are not suited to electric technologies. It’s a versatile fuel suitable for use in forklift trucks, mobile generators and heating appliances, such as boilers in both commercial and non-commercial buildings.
Red diesel accounts for nearly 14 million tonnes of carbon dioxide in the UK each year. It also causes harmful nitrogen oxide (NOx) and Particulate Matter (PM) emissions. By using LPG, businesses can reduce their carbon footprint and improve air quality, as it emits 33% less CO2 than coal and up to 20% less than oil. It’s also a clean burning, smoke-free fuel which emits very low levels of NOx and PM which is important when handling food, pharmaceuticals and textiles.
Any machines or appliances that can run on LPG can also use bioLPG. It’s a versatile, ‘drop-in’ 100% renewable solution that will further help companies transition to net zero.
For more information on where LPG can be used instead of red diesel here.
[1] LPG to soften blow of expected ‘Red Diesel’ subsidy cut – Industrial Compliance (industrial-compliance.co.uk)
