The rules on red diesel are changing! Are you ready for the new legislation?
Tue, December 14, 2021 - 9:43:00
The red diesel rebate has been a hot topic amongst many industries over the last year. However, after careful consideration earlier this year, the Chancellor and the government have decided to proceed with abolishing the use of red diesel from the 1st April 2022 in a number of sectors, to help reduce the impact that fossil fuels have on the planet. Specifically, their aim is to reduce commercial use of red diesel, especially in the plant and construction sectors, and to encourage the use of other fuels such as white diesel or alternative greener options. So how some industries will be affected and what do they need to know to prepare for the new legislation?
What do you need to know about the new red diesel reform?
Restrictions on the use of red diesel come into force on 1st April 2022 for a range of industries including plant, construction, leisure, mining, quarrying, road maintenance and logistics. This means that there are less than 5 months to get ready to make sure that you comply with the new regulations from April. So here are a few things that you need to know:
- From 1 April 2022, Registered Dealers in Controlled Oils will need to flush their tanks and supply lines when switching a fuel tank from red to white diesel, so there is no trace of the rebated fuel.
- End users that are losing their red diesel entitlement will need to make sure that they run down their existing stocks and do not purchase red diesel from 1 April 2022.
- The government has recognised that some users such as data centres are holding large amounts of red diesel but may only use it for a few hours a year in case of emergency. So it has been decided that HMRC will investigate and decide if the user can provide enough evidence that they have not built up their stocks or taken red diesel after the rules changed.
- As the price of red diesel is a lot lower compared to the average price of white diesel, users will see an increase in how much they spend on fuel. For example...
Red Diesel p/litre: 68.1p
White Diesel p/litre: 150.61p
Difference p/litre: 82.51p extra!
Prices obtained on 8th December from Farmers Weekly and the Government website.
- As white diesel is so much more expensive and also widely used by the public, it needs to be considered that a rise in fuel thefts may occur once the switch has been made, meaning those storing fuel onsite need to consider protecting their fuel, as well as controlling and monitoring its use amongst staff.
How will the changes affect you?
Using our longstanding industry expertise and continually monitoring the changes in the fuel sector we want to make sure that our customers are well prepared for the upcoming changes. As every industry will be impacted by this new legislation differently, we have prepared more detailed information for each of the industries we believe will be affected the most.
1. Transport/Fleet and Plant Hire
These industries will no longer be able to fuel their vehicles onsite using red diesel, they must make the switch over to an alternative fuel. This will involve running down or removing red diesel from vehicles, machinery and/or fuel storage tanks. There’s a possibility that they will be able to sell back any excess stock of red diesel to fuel suppliers which will help towards funding the cost of replacing the fuel.
The cost of refuelling vehicles and machinery, or filling up storage tanks, will see an increase due the difference in price between red diesel and alternative fuels such as white diesel. This will happen regardless of whether refuelling at a public petrol station or onsite using their own storage and dispensing equipment. One of the most important things that these industries need to consider is securing their site, any fuel storage tanks, and the vehicles or machinery such as diesel-powered chiller units on trucks, forklift trucks and mobile generators, to protect against theft, as well as unauthorised fuel dispensing.
As more industries will switch over from red diesel to alternative fuels, engineers will see an increase in jobs relating to fuel security and fuel management systems being required onsite or at business premises. This may require extra labour to implement these changes (depending on the size of the team), and extra training on products and installation (depending on the type of equipment being installed). Furthermore, it’s likely that you’ll also see an increase in call out jobs to assist with breakdowns, maintenance and further installs or changes to equipment.
3. Fuel Suppliers
The increase in demand for white diesel and other alternative fuels that are more expensive might result in more customers contacting fuel suppliers about fuel security options and to find more information on how they can manage the fuel usage on their site. We believe that as industries are starting to swich over fuel suppliers may see a surge in enquiries for fuel management systems, gauging, fuel monitoring and security solutions. So, our technical and sales team will be on hand to support fuel suppliers offering expert product selection advice and helping their customers to find the right products that match their applications and requirements.