HVO: An industry update

TRA proposes removal of measures for HVO

The UK’s Trade Remedies Authority (TRA) has published its recommendations with regard to trade remedy measures on biodiesel. Having reviewed each measure that was carried across into UK law when the UK left the EU, to assess suitability for UK needs, the TRA has proposed that existing measures on imports of FAME biodiesel are kept, but that measures on imports of HVO biodiesel are removed.

HVO industry update

The recommendations, if upheld, could alleviate the two main concerns raised over HVO – future availability and cost – since the removal of the trade measures would mean that HVO could be imported from the US / Canada for use in UK agriculture and transport as well as in oil-fired heating. This would establish the security of supply needed to encourage uptake of this low carbon alternative to kerosene.

The TRA’s provisional findings, contained in the Statements of Essential Facts, would mean that the UK’s FAME production industry continued to be protected from dumped and subsidised biodiesel from the USA, including where consigned through Canada, but that HVO from these countries could be imported.

Investigation findings

Following transition reviews, the TRA has proposed that anti-dumping and countervailing measures on fatty-acid mono-alkyl esters (FAME) biodiesel be maintained at their current levels for five years from 30 January 2021. It has also proposed that the same measures on renewable diesel produced from paraffinic gasoil obtained from synthesis or hydro-treatment, of non-fossil origin (HVO) be revoked.

The UK has an established FAME production industry, but no UK HVO production industry exists.

The TRA’s investigations found that government-subsidised producers in the US would be likely to dump FAME biodiesel in the UK in the future and cause harm to UK industry if the measures no longer applied. Although the TRA found that dumping of subsidised HVO would also be likely to occur if the duty were no longer applied, there would be no damage to domestic manufacturers/businesses as there is no HVO industry in the UK and the higher prices for HVO would mean that it did not displace UK produced FAME.

HVO in demand for heating

The TRA also established that there is demand for HVO in the UK for use in heating buildings as it offers a cost-effective and more environmentally friendly alternative to existing heating fuels.

TRA chief executive Oliver Griffiths said: “The TRA’s findings on biofuels shows how we can tailor existing measures to better suit the UK economy. Our proposals would ensure that British biodiesel producers continue to be protected from unfair international competition from subsidised US products, while helping to drive down prices for users of a type of biodiesel that is not made in the UK.”

A 30-day period for comments ended mid-January. After consideration of any submissions the TRA will produce Final Recommendations, which will be sent to the Secretary of State for International Trade who will make the final decision on whether to uphold the TRA’s recommendations.

Immediate action needed  

Bruce Woodall, chairman of OTS Group Ltd, a company with 50 years’ experience in the fuel sector and taking an active lead in creating a sustainable future for fuelling solutions, welcomed the recommendations from the TRA but stressed the need for more urgent action on HVO.

“There is no question that a new fuel like HVO, which reduces GHGs by up to 90% immediately, is a vital liquid fuel, especially to replace kerosene in the home heating sector,” he commented. “But the cost has to be aligned with the current cost of kerosene for the domestic market to take it up.

“The Government’s present policy of backing heat pumps as the solution for off-grid domestic heating is totally impractical for any home that cannot achieve an EPC rating C without incurring massive cost or, if listed, never.

“If the UK is to achieve net zero by 2050 the Government must start immediately taking pragmatic steps towards that goal. Enabling the use of HVO in the home heating sector for off-grid homes would be a massive step in the right direction and the impact would be immediate.”

UKIFDA supports TRA proposals on HVO measures   

Following the publication of the TRA recommendations on trade measures for biodiesel UKIFDA indicated their support for the proposals in the following statement:

UKIFDA notes the announcement today from the Trade Remedies Authority that their provisional recommendation is to remove measures on imports of HVO into the UK from the US.

We support this recommendation.

The liquid fuel for heating industry in the UK is currently concentrating on renewable liquid fuels as a replacement for conventional fossil-based heating oil, in particular Hydrotreated Vegetable Oil (HVO).

The fuel provides an 88% reduction in carbon emissions and can simply replace heating oil without any major changes to a customer’s appliance making it an extremely cost-effective and less disruptive way of decarbonising.

We believe this will be the technology of choice for many of our customers.

The announcement highlights the use of HVO in home heating. The UK currently does not produce any HVO and therefore this announcement today of widening supply makes a lot of sense without damaging any operations in the UK.