Motorists in a ‘very difficult position’ after red diesel ban – will ‘take a hit on costs’

Fuel doctor examines car filled with 'contaminated diesel'

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The Government stated that removing red diesel entitlements will also help to ensure that the tax system incentivises users of polluting fuels like diesel to use alternatives. It said the measure “is not expected to have any significant macroeconomic impacts”.

Alastair Hayfield, Senior Research Director at Interact Analysis, commented on the fuel law change, saying prices have been volatile for some time.

He told “The rebate is used to offset fuel duty and is worth 46.81 pence per litre, making a significant contribution to cost savings for construction and agricultural users.

“Even before the end of the fuel rebate, fuel prices have risen to a level not seen since 2012.

“Prices have been slowly creeping up during the recovery from Covid, but the invasion of Ukraine by Russia has seen prices sky-rocket. 

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“Whilst oil producing nations have agreed plans to increase production to offset the shock, it seems clear that higher prices are likely to be the norm for some time to come.”

When the restrictions were announced, the Government pointed towards improving the energy efficiency of their vehicles and machinery, investing in cleaner alternatives, or using less fuel.

Most conventional vehicle drivers are looking towards electric vehicles as their next option.

Fuel duty for regular vehicles is 57.95p per litre, compared to 11.14p per litre for rebated fuels.

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Any vehicles, machines or appliances which are found to be running unlawfully on rebated fuel and red diesel could be seized.

However, for many industries affected by the restrictions, this may not be immediately possible.

Many who require larger vehicles do not have electric substitutes and will need to rely on petrol and diesel to continue.

Operating costs are expected to rise by around 15 percent, with companies facing additional fuel expenses of between £100,000 to £400,000 per year, according to Research Management Association Scotland.

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Mr Hayfield added: “Interact Analysis forecasts that battery prices for electric construction machinery will decline quickly over the next five to 10 years.

“However, this won’t happen quickly enough to make a difference with the current situation.

“The UK Government could look across the North Sea to The Netherlands, where a set of smart government policies are helping to fund the adoption of electrified construction machinery.

“In the meantime, UK operators are left in a very difficult position – take a hit on the costs, or pass them on to their customers.”

The UK Government removed the entitlement to use red diesel and rebated biodiesel for most sectors and applications.

This was done in a bid to reduce greenhouse gas emissions to net zero by 2050 and cut air pollution across the UK.

Red diesel accounts for around 15 percent of all the diesel used in the UK, according to Government data.

It is estimated that it is responsible for the production of nearly 14 million tonnes of carbon dioxide a year.

Red diesel used in the construction and infrastructure building sectors was also estimated to have caused seven percent of nitrogen oxide emissions and eight percent of PM10 emissions in London in 2018. 


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