The Long and Winding Road to NET Zero

Wed, Dec 7, 2022

Where do liquid fuels currently stand in the journey?

The past few years have been showered with less than promising news for the liquid fuel industry. From the removal in red diesel subsidies to the government’s focus on heat pumps for off-grid heating and electric to replace the internal combustion engines of petrol and diesel vehicles. But now after much hard work from UKIFDA, OFTEC and other bodies, is the liquid fuel industry starting to see more promising signs?

Is electric too much of a slow burner?

electric vehicle

While electric vehicles could be the answer to decarbonising transport, there are still issues surrounding battery production, how green the UK’s electricity grid is when still partially powered by fossil fuels, and of course, the costly investment involved in replacing the current infrastructure and vehicles.

With soaring electricity prices and the cost-of-living crisis to contend with, persuading off-grid homeowners to swap to a heat pump system that is on average £12,000, and businesses and consumers to upgrade to electric vehicles which have become more expensive to charge, is not going to get easier. On top of this, in his Autumn statement, Chancellor Jeremy Hunt announced that from April 2025, electric vehicles would no longer be exempt from vehicle excise duty; an arguably contradictory initiative given the focus on NET zero.

Right now, of the 32 million vehicles on the road in the UK, less than 4% of them are electric, and electric trucks account for less than 0.1% of the HGV market. The reality of these figures are that the uptake of electric vehicles, whilst growing, is not at the speed that is required. However, this doesn’t mean that we need to sit and wait for electric vehicles to develop further. If we are going to make a considerable dent in our carbon footprint, the government need to start taking greener liquid fuels more seriously and hopefully that’s what we’re beginning to see…

A long awaited step forward for HVO?

Fuel prices

Whilst greener fuels such as HVO are not an entirely NET zero solution, their adoption sees greenhouse gases from production/fuel lifecycle, vehicles and off-grid heating systems immediately reduced by 90% without any costly infrastructure alterations for fleets and off-grid homeowners. However, the cost factor has still been the main barrier to widespread HVO adoption, with the price per litre exceeding that of diesel and kerosene.

In November, the liquid fuel industry welcomed the news that the Secretary of State has announced the revocation of import duties on HVO from the US and Canada; a product not currently produced in the UK. The removal of trade measures and increase in competition contributes to reducing the two main concerns regarding HVO; future availability and cost.

So now we pose to the UK government, will you follow the lead of Sweden, who by making HVO completely tax-exempt, saw a 124% increase in HVO usage? Even if only used as a transitionary solution, it only seems to be good sense to encourage the move from fossil fuels to a 90% greener option that can used as a drop in replacement.

If we are going to make a considerable dent in our carbon footprint, the government need to start taking greener liquid fuels as an alternative to fossil fuels more seriously, and hopefully that’s what we’re beginning to see.

Michelle Jackson

Marketing Manager