Why was red diesel made illegal in April 2022?
On the 1st of April, the government brought in new rules that almost entirely banned the use of red diesel, with the exception of organisations in the agriculture, rail transport and non-commercial heating sectors. The move is intended to help the government reach its intended target of making the UK economy Net Zero by 2050, which essentially means that it captures just as much carbon as it actively emits.
However, the ban of red diesel is already taking a major toll on businesses, with projected extra costs potentially numbering in the millions of pounds. What’s more, several business owners have already said that they’re also concerned it could leave their firms more vulnerable to fuel theft, due to the greater value of the only alternative: white diesel.
Many of the same business owners have gone on to call the government’s ban premature, and asked ministers to reverse it (at least temporarily), but so far there are no signs the government plans to do so. Here’s what you need to know about the whole situation so far.
What is red diesel?
In a nutshell, red diesel is rebated fuel that’s taxed at a much lower rate. The reason it’s red is because a dye is deliberately added to mark its reduced rate of taxation. It’s otherwise identical to white diesel, or standard diesel - the type that’s used in private vehicles driven on public roads every day.
Unlike white diesel, red diesel has never been legally permitted for use on public roads or personal vehicles. Instead, it’s intended for use in larger industrial vehicles like cranes or diggers, or mobile generators. However, the new rules means that it’s now largely been banned for use in most heavy equipment like this too, save for those working in a select few industries.
How has the law changed from April 2022?
As of the 1st April 2022, the government has introduced a wide-ranging ban on rebated red diesel, which means that most organisations that have used it up until now will instead have to rely on white diesel from now on. As we’ve touched on above, white diesel is taxed at a much higher rate; which means that companies will have to pay approximately an extra 47p per litre of fuel.
Exceptions apply to anyone working in agriculture, rail transport, and non-commercial heating. The rule change was initially announced in the 2020 Budget, but has only come into effect this year.
Why is red diesel being phased out?
There are a couple of reasons, but the most pivotal reason it’s being brought in is to help the UK meet its core climate change and air quality targets, especially relating to its legally-binding aim of reaching Net Zero by 2050. The government has announced that it intends the new law to ‘improve the energy efficiency of their vehicles and machinery.’
It also aims to ‘help ensure fairness between different users of diesel fuels’. Red diesel is responsible for an estimated 14 million tonnes of carbon emissions annually, and the government says that the rule changes mean that “many organisations will need to use diesel taxed at the same rate as that used by ordinary motorists, helping us to move to Net Zero by 2050.”
What’s been the reaction?
As you might have expected, it’s been a pretty controversial move within a number of sectors. The onset of the coronavirus restrictions in 2020 caused disruption on such a massive scale that many firms are still recovering from it even today, and since then they’ve had to deal with a number of further obstacles. The most pressing of these is, of course, the steadily rising price of fuel - one that’s now been worsened by the ongoing situation in Ukraine.
All that means that the cost of diesel has risen by 36% in the course of a year, and the latest changes mean that fleet owners of refrigerated trailers or plant and construction equipment are now going to have to contend with another rise in costs. That’s naturally going to have a huge impact on their finances, and likely means that many firms are now going to have to pass certain costs onto their customers if they’re to continue operating. That’s understandably making a lot of people nervous.
To put this in context, it’s estimated that the move to the more expensive white diesel could cost the construction and manufacturing industry alone up to £25 million a year. That’s largely because the new laws don’t just apply to vehicles, such as cranes or trucks. It applies to heavy equipment of all kinds, so that even things like mobile generators won’t be able to run on red diesel when they’re being used for construction or quarrying.
Right now, there are growing calls for the government to rescind the ban - at least temporarily - to give fleet owners more time to adapt. It’s worth noting that many have pointed out they’re not actually opposed to the ban in principle, and indeed, a significant number are implementing their own green strategies to help minimise carbon emissions from their operations.
And then, of course, another key concern is looming large on the horizon…
New diesel theft worries
The crux of the issue around the latest move revolves around the fact that white diesel is more expensive. That’s only going to intensify the costs associated with fuel skimming, which is already a major problem for UK firms. Skimming is the term used to describe small amounts of fuel being stolen from the top of the tank - most frequently by drivers who think of it as a perk of the job, and basically a victimless crime.
Unfortunately though, it’s anything but victimless. Skimming is estimated to account for 99% of diesel theft, and can cost businesses hundreds, thousands or even millions each year.
Happily, that’s exactly where we can help here at TankSafe. Our patented TankSafe Optimum is a sophisticated antisiphon device that’s specifically designed to counteract the 5 biggest problems with basic antisiphons, making it the only one able to prevent 100% of fuel theft.
It’s been proven to reduce bills by around 15%, with a Return on Investment of between 3 to 6 weeks. (Depending on the size of your business, that could range up to thousands or even millions of pounds!)
If you’ve got any more questions or need any more details, that’s exactly what we’re here for at TankSafe. You can find more answers on our Frequently Asked Questions page, or alternatively feel free to give us a quick call on 01253 400 401 to talk directly to one of our experts. We’re here to help!