Fuel technology specialists SulNOx Group Plc said the move to end the rebate on red diesel would hit consumers in the pocket while having a minimal impact on improving the environment.
From April 1, rebated diesel, more commonly known as red diesel, and rebated biofuels will no longer be allowed to be used as they are currently and will only be legal for a small number of industries in a tightly controlled way.
Staggering cost increases
The move has sparked concern, with reports suggesting that around half of affected firms in industries like construction could be put out of business due to staggering fuel cost rises of around 55% from red to white diesel.
The Government says the new rules will help to ensure fairness between the different users of diesel fuels, as well as encouraging the development and adoption of greener alternative technologies and encouraging fuel users to improve the energy efficiency of their vehicles and machines, or to use less fuel.
But Nawaz Haq, executive director of SulNOx Group Plc, said the timing of the rule change, particularly in the current climate with record fuel prices, was worrying.
“A radical rethinking of the government’s fuel policies is needed,” he said. “At the moment, fuel policies are not aligned to the economic needs of consumers or businesses and do little to combat emissions and improve air quality. The red diesel taxation is nothing more than a deadly tax without purpose that will not only threaten the survival of half of affected businesses at a cost of £500 million, but also threaten the government’s own waste strategy.”
Mr Haq, who is also a Member of the Royal Institution of Chartered Surveyors, added: “It is clear to see that we are not at a stage where construction plant vehicles for example can be electrified – the technology either just isn’t there or is nowhere near being viable if it is. What also doesn’t make sense is the fact that cleaner fuels such as HVO are also being penalised by this taxation.”
Recently, a number of construction industry bodies including the Federation of Master Builders, the National Federation of Builders, Build UK and the Home Builders Federation, wrote to Chancellor Rishi Sunak and Business Secretary Kwasi Kwarteng warning that the end to the red diesel rebate could threaten construction projects, force house prices up and “risk the viability of local builders”.
“Crippling taxes and no viable greener vehicle and machinery options mean businesses must focus and prioritise improving efficiencies and reducing fuel consumption,” said Mr Haq. “This is essential, especially in our time of fuel and climate crisis and is exactly where products that optimise combustion and increase fuel efficiencies of diesel, biofuels, HVO and other fuels can make a difference by enabling significant financial savings through reduced fuel consumption as well as environmental benefits through net carbon and emissions reductions.
“With such benefits and with fuel compliance certifications in place, there are no barriers to simultaneously fight back against high fuel costs and help to meet environmental responsibilities.”