How the changes to red diesel rebates will impact the construction industry
One week into the new rules on the use of red diesel and rebated biofuels, do you know what you need to do? Or have you been taken unawares? These restrictions will have big economic and practical implications for the construction industry, so what do you need to know?
This policy restricts the entitlement to use red diesel and rebated fuels to the following purposes:
for vehicles and machinery used in agriculture, horticulture, fish farming and forestry. This includes allowing vehicles used for agriculture to be used for cutting verges and hedges, snow clearance and gritting roads
to propel passenger, freight or maintenance vehicles designed to run on rail tracks
for heating and electricity generation in non-commercial premises – this includes the heating of homes and buildings such as places of worship, hospitals and townhalls; off-grid power generation; and non-propulsion uses on permanently-moored houseboats
for maintaining community amateur sports clubs as well as golf courses (including activities such as ground maintenance, and the heating and lighting of clubhouses, changing rooms etc.)
as fuel for all marine craft refuelling and operating in the UK (including fishing and water freight industries), except for propelling private pleasure craft in Northern Ireland
for powering the machinery (including caravans) of travelling fairs and circuses
This means that the UK’s construction sites will have to use the more expensive white diesel, or find alternative ways of generating power and fuelling site vehicles.
While the measure will also extend fuel duty to biodiesel, we are seeing a number of businesses making the switch to biofuels such as HVO. With standard fuel prices set to rise due to the removal of the rebate, biofuels no longer seem out of reach.
For businesses in the construction industry that do not qualify to use red diesel and rebated biofuels, the Government have stated that the upcoming restrictions are not predicted to have any long-term negative impact, with the only change being that they are now required to pay the full duty rate for white fuel. Although, it will be necessary for such businesses to make one-off payments to be in accordance with the new restrictions. These include removing red diesel and rebated biofuels from vehicles, machinery and storage tanks, so as to avoid cross-contaminating rebated and non-rebated fuels, and sourcing new fuel alternatives.
The government guidance on the matter notes that if you have any surplus rebated fuel in your storage tanks after 31 March 2022, you will need to:
sell or give it to someone who is allowed to use it
sell or give it to any Registered Dealer in Controlled Oil (RDCO) such as OTS Group;
dispose of it via an approved waste oil recycling or disposal company
In addition, you will need to keep records to show how and when the fuel was disposed of or sold.
While these restrictions may be onerous for businesses, the government predicts that they will have a positive impact on carbon emissions and air quality by incentivising businesses to use greener fuel alternatives, improve the efficiency of their fuel use, or simply use less fuel. What are your thoughts?
