In 2022, will the government finally outlaw red diesel?

Posted on November 2, 2020

The government's changes to red diesel eligibility took effect on April 1, 2022, limiting the use of red diesel in most sectors. Continue reading to find out if your industry is affected by the changes and what alternatives are available going forward.

Back in 2019, the UK government announced its plans to become carbon neutral by 2050, thereby ending its contribution to climate change. These plans were, at the time, among the most ambitious timetables set by any nation on the planet.

Since then, the government has implemented a number of policies aimed at achieving a carbon-neutral future.

Changes to long-standing tax and duty rates have been designed to incentivize users to develop and adopt cleaner alternative fuels for industries that rely on red diesel and white diesel.

What exactly is red diesel?

Red diesel, also known as gas oil or cherry red, is regular diesel that was only used in off-road machinery and engines, primarily in the agricultural, marine, and construction sectors, prior to April 1, 2022.

Red diesel differs from white or "road" diesel in two ways: its color and the taxation rate. Chemically, the two fuels are identical, and when burned, they emit identical levels of greenhouse gases.

Its color is altered by the use of a red dye that distinguishes it from unrebated fuel. The dye has no discernible effect on the properties of the fuel, but it coats the inner workings of machinery, allowing law enforcement agencies to track the illegal use of the fuel.

The biggest and possibly most significant difference between the two is their tax rates. Red diesel users paid 11 cents per gallon in January 2022. Fuel duty is 14 pence per litre (ppl), which is significantly lower than the 57 pence. White diesel users pay 95ppl. This reduced tax rate effectively provided an 81% savings.

From an environmental standpoint, this causes a number of issues, not the least of which is that red diesel vehicles pay less than single car owners for the harmful emissions they emit. After all, 1 litre of diesel emits the same amount of pollution whether it is used on or off the road.

To encourage users to abandon this carbon-heavy fuel, the government lifted a 10-year moratorium on red diesel fuel duty.

The budget for 2020 includes red diesel.

In Budget 2020, the government announced a number of changes to its approach to diesel taxation. The most significant changes were the new red diesel restrictions, which were applied sectorally rather than individually and went into effect in April 2022.

Affected businesses are no longer eligible for the red diesel tax rate, which means they must use fuel taxed at the standard white diesel rate. The goal of this change is to offset the harmful environmental impact of fossil fuels while encouraging users to switch to more environmentally friendly alternative fuels.

Who can now use red diesel?

Please keep in mind that this list was updated in April 2022 to reflect legislative changes.

Red diesel is still used in both commercial and domestic settings, including:

  • Rail transportation
  • Golf courses and amateur sports clubs in the community
  • Sailing, boating, and marine transport (except in Northern Ireland for private pleasure craft)
  • Fairs and circuses on the road
  • Non-commercial use of fuel - electricity generation and heating
  • Agriculture, horticulture, aquaculture, and forestry

The importance of red diesel to the agricultural, forestry, horticulture, and fishing industries has been recognized by the government. Because these vital industries are so inextricably linked, they were most likely treated as a single entity when it came to changes in red diesel eligibility.

Retaining red diesel entitlement for passenger and freight rail is also a calculated move because it assists providers in keeping costs low. This, in turn, reduces the UK's reliance on road transportation such as private cars, vans, and lorries, lowering their cumulative environmental impact.

It is also important to maintain protection for domestic users of red diesel for heating. The costs of connecting off-grid homes to the national network are prohibitive and, in most cases, environmentally counter-productive.

This is not to say that eligibility will not change in the future; the government has stated that the use of red diesel in all of these settings will be reviewed as alternative fuels and power sources become available.

Red diesel is still used for heating. Switching to home heating oil or industrial heating oil could save you money. To learn more, call our heating oil experts at 0330 678 0880.

Why was red diesel prohibited in some industries but not others?

The decision to prohibit certain industries from using red diesel was not made arbitrarily; it is supported by some startling statistics.

  • Every year, red diesel contributes 14 million tonnes of CO2 emissions.
  • In 2018, the construction and infrastructure sectors accounted for 7% of NOx emissions and 8% of PM10 emissions in London.

The environmental impact of red diesel will be reduced as its widespread use is restricted, and the additional duty paid by sectors switching to white diesel will be reinvested in green initiatives. Businesses will also be more motivated to switch to cleaner-burning fuels like HVO.

Consultation period for red diesel

The UK government held a consultation period from July 2020 to October 2020 to allow red diesel users to express their concerns about the change in red diesel eligibility.

Governing bodies considered all responses and any claim made by a sector to keep their red diesel entitlement. A few months later, the summary of responses was published, followed by draft legislation from HMRC in 2021.

Why did the government postpone the decision until April 2022?

The government recognized that, while these changes will assist the UK in meeting its environmental obligations, they will still pose a significant challenge to UK businesses. The delay provided time for business owners to prepare their operations for the transition to a new fuel type or to increase operational efficiencies to reduce fuel consumption.

Existing duty exemptions

The budget made no mention of any proposed changes to the existing 100% fuel duty relief for specific sectors, even if these relate to industries that will no longer be allowed to use red diesel.

For example, port or seagoing vessels that are currently eligible for Marine Voyages Relief, such as the Royal National Lifeboat Institution (RNLI), will remain so even after they switch to white diesel in April 2022.

However, VAT will remain at the current rate of 20%, rather than the reduced 5% VAT rate that currently applies to all purchases of red diesel up to 2300 litres.

Tax changes for biofuels in the 2020 budget

The changes outlined in the 2020 budget apply to biodiesel in both its undiluted and gas oil blend forms.

What does this mean for those who use biodiesel?

Biodiesel users will be required to pay the standard road biodiesel duty rate, which is currently set at 57 cents per liter. 95ppl

The only exceptions to these new rates are the industries that have retained their right to use red diesel, which include agriculture, forestry, horticulture, fish farming, rail, and non-commercial heating.

Despite the fact that biodiesel is a cleaner alternative to diesel, these plans ensure that non-road users of both diesel and biodiesel are subject to the same rules.

Imposing changes on red diesel users

Those sectors that will lose access to red diesel will be able to switch to white diesel, but it won't be as simple as using red diesel on March 31, 2022 and topping up with white diesel on April 1, 2022.

Red diesel contains a dye that is intended to stain the interiors of engines, tanks, and pipework. This allows law enforcement to track and trace illegal fuel use, but it also means that users who switch after April 2022 may be falsely accused of misusing red diesel.

While the government has not issued any official guidance to users, it has requested that they do not flush their systems. This is to avoid accidental environmental damage caused by the improper disposal of red diesel.

The new rules apply to fuel suppliers.

In order to facilitate the tax rate changes, fuel suppliers were asked to make some significant changes to their operations.

The government proposed that suppliers replace their fuel tanks or flush out all tanks, pumps, and fuel transport equipment until there are no traces of the red diesel dye left. This will assist HMRC and law enforcement agencies in ensuring compliance with the new tax laws, but it will cost fuel suppliers.

Suppliers are also being asked to keep a close eye on the use of red diesel in the future and to ensure that all fuel supplied to a sector losing entitlement burns all low tax diesel before this date.

What are the consequences of using red diesel after April 20, 2022?

The illegal use of red diesel is a criminal offense under current law. If found guilty, perpetrators can face heavy fines or even jail time.

Guidance was provided to assist current red diesel users who will lose their entitlement beginning in April 2022. They were advised to deplete existing stocks of red diesel before April 1, 2022, and to transition to either white diesel or a different fuel source, such as HVO fuel, by that date.

If after this date, vehicles, tanks, and machinery are discovered to contain red diesel or the red dye marker, the fuel, as well as any machinery that may contain the fuel, may be seized by authorities. If the user believes they are still entitled to use the fuel, they will have the opportunity to appeal.

What are our next steps?

The writing is on the wall for fossil fuels in the UK; while eliminating their use entirely will be difficult (if not impossible), the government will use all available tools to achieve their zero carbon goals.

We support the government's aggressive target of becoming a carbon-neutral economy by 2050. Climate change is a real and present threat to the entire world, and we've already taken steps to reduce our own carbon footprint, such as offsetting our delivery mileage and introducing a number of green fuels to our product portfolio.

However, we are urging the government to reconsider its position on alternative fuels, clean diesel alternatives, and biodiesels.

Clean diesel alternatives, such as HVO fuel, are available on the UK market and eliminate the challenges faced by first generation biofuels while providing a drastically reduced emissions profile. By treating these fuels the same as fossil diesel, the government creates barriers to adoption and prioritizes tax revenue over reduced emissions.

If the government treated greener fuels like HVO based on their emissions, the UK could drastically reduce its emissions in the short term and more easily meet its carbon neutral goals.

HVO fuel is the fuel of the future for diesel users.

We are available 24 hours a day, seven days a week to assist, support, and advise our customers on how these changes will affect their industries and the options they have moving forward, such as HVO fuel.

HVO fuel is the long-awaited synthetic diesel alternative, combining significantly lower emissions with the dependability of fossil diesel. However, HVO fuel has its own distinct characteristics.

It has a longer shelf life of up to ten years because it contains no fatty acid methyl esters (FAME), making it less susceptible to bacterial attack than diesel, which has a shelf life of 12 months on average.

It also has drop-in functionality, which allows users to switch to HVO fuel without having to make costly engine modifications. Furthermore, with EN 15940 and ASTM D975 certification, as well as a wide range of OEM approvals, HVO fuel will not disappoint.

Learn more about HVO fuel by visiting our HVO page or calling our fuel experts at 0330 678 0880.

The elimination of red diesel eligibility in a variety of sectors lowers the barrier to the adoption of alternative, greener fuels. We hope that under the new rules, diesel users will take advantage of the opportunity to switch to lower-carbon fuels.


In April 2022, the information was updated.

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