How one major player is navigating the complexities of energy transition – while supporting customers every step of the way.
As the UK and Ireland pursue ambitious net-zero goals, the liquid fuel industry stands at a critical crossroads. Traditional fuel oils have powered marine transport, road fleets, off-grid machinery, and heating systems.
Now, with mounting regulatory, environmental, and market pressures, the sector is being reshaped in response to the growing demand for sustainable alternatives.
Sector adaptation
In this exclusive interview, we speak with Stephen Fletcher, Managing Director, and Dan Webb, Head of Sales Energy and Peter Bamber – Senior Consultant, at Prema, a leading importer, blender and supplier of specialist fuel oils.
The company is currently undergoing a major strategic transformation, looking to become the frontrunner in the supply of sustainable liquid fuels across diverse sectors.
We discuss how Prema Energy is adapting its operations, product portfolio, and customer approach to meet changing demands. From shifting volume trajectories and policy needs to carbon accounting and ESG compliance, the conversation offers valuable insight for distributors, suppliers and end-users into the opportunities – and challenge – of decarbonising liquid fuel supply chains.
With Prema Energy looking to lead the liquid fuel transition as we move from fuel oils to sustainable solutions, we sat down with key members of the team to understand the shifting landscape of sustainable liquid fuels and to answer the big questions facing UK industries.
Company vision
What prompted your company’s strategic shift toward sustainable liquid fuels, and how has this influenced your overall vision and mission?
Peter: The first interest in sustainable fuel for commercial heating came from the quarry industry, which wanted to reduce carbon emissions from roadstone coating plants in response to the Carbon Reduction Commitment scheme.
Biofuel oils made from tall oil pitch and later rapeseed oil distillation residue were developed to replace residual fuel oil in these plants at a comparable cost.
From here, we found more uses for the fuels – for example, as boiler fuel to replace heavy fuel oil in malt whisky production when carbon emissions moved up the agenda.
Steve: Since those initial heating oil products, we’ve grown our offering significantly, driven by the increasing need to decarbonise. We’ve expanded our range to include solutions like HVO and low-carbon marine grades.
While we’ll always be a leading wholesaler and direct-to-business retailer of sustainable fuels, we’re also shifting towards a more consultative approach.
We are helping our customers across all industries to decarbonise by assisting with tanking solutions, offering support with carbon accounting, and providing advice from our experienced engineers and logistics consultants to find the best solutions for you.
How do you manage the balance between supporting legacy fossil fuel customers and leading the charge toward decarbonisation?
The biggest issue our customers have is, understandably, price. And while HVO is more expensive than diesel at the moment, we always try to be pragmatic where we can.
We steer clients towards solutions like HVO30, which offers a cost-effective emissions reduction while meeting the EN590 standard.
We’re continuously pushing for lower emissions, and a reduced government duty on HVO would be pivotal in accelerating the transition for businesses, especially those with tight margins like hauliers and 3PLs.
The truth is some companies are not ready to start decarbonising yet, but they will have to change, whether it’s because they may lose work or because they are being driven to reduce their scope 3 emissions.
Product evolution and volume outlook
What sustainable fuels are currently in your portfolio, and what innovations or blends are in the pipeline?
Commercial heating applications for liquid biofuels were completely ignored when the government reformed the treatment of red diesel from April 2022. As a result, all liquid biofuels changed from duty-free to diesel duty overnight, and many customers had to revert to mineral oil because of the massive hike in prices. Prema HVO 50 and Prema Bio Heating Oil have been developed in conjunction with HMRC to offer duty-free options. These are fantastic products that balance CO2 reduction and cost, but because of our facilities in Eastham, we can create an almost limitless number of sustainable fuel blends to meet any criteria.
Which sectors (marine, road transport, machinery, heating) are most receptive to these products – and why?
There has been much more uptake from the heating and road sectors with sustainable fuel oils. Non-road mobile machinery is slowly growing, but there is a hesitancy there, generally regarding tanking. We expect Marine to pick up as the new legislation comes into force in 2026. The reality is that it will be difficult to supply sufficient sustainable liquid fuel for inland markets, marine, and air travel globally. There will be better solutions over time.
What volume trends are you seeing for traditional liquid fuels versus sustainable alternatives across your customer base?
The diesel market is still moving a lot of fuel, and HVO is growing every day. It’s going to easily surpass the 600 million litre market it was last expected to be. We watch the Platts price, and we know from our colleagues that diesel sales in the UK seem to be stable, but we are only seeing more interest and more demand for sustainable fuels month after month.
Uptake and Challenges
What affects availability or pricing?
There has been a lot of press about the feedstocks and certification of HVO. We follow the ISCC certification, as it’s the best we have today. As such, we decided from the outset not to purchase HVO produced from sources that include palm oil, palm oil mill effluent (POME), or spent bleached earth mill effluent (SBME). We only supply HVO produced from used cooking oil (UCO) and work with our partners to ensure traceability through the supply chain via the ISCC third-party verification route.
We also support the Renewable Fuels Assurance Scheme (RFAS), operated by Zemo. This further enhances the sustainability of the supply chain by extending traceability to the end-use customer. This ensures that via a combination of RFAS and ISCC, HVO can be traced to the accredited production and collection of feedstocks.
Which sectors are proving most receptive to sustainable fuel adoption – and why?
Simply, those that can afford it or have to because of legislation or pressure from their upward supply chain. Many of the larger consumer goods conglomerates are rightfully pushing to decarbonise their supply chains, and it can fall to the logistics firms to decarbonise as a large part of their overall scope 3 emissions.
Where are the main concerns or barriers (technical, logistical, commercial, or regulatory) in sectors slower to transition?
The RTFO scheme supports sustainable fuels for automotive applications, but there is no support for companies wanting to use sustainable fuels for commercial heating, which does hamper adoption. But understandably, the pushback we get from customers comes down to cost; whether it affects their manufacturer warranties and engines; and if they can get a secure supply and storage of the product.
This is why we are keen to let people know that while it is doubtful that HVO will become a regular feature on forecourt pumps, we can help with tank storage, monitoring, and alleviating the logistical concerns our customers have. Anecdotally, we have heard that our HVO has had a positive effect on road fleets. A prominent waste management company believes they get better MPG and have to do fewer filter changes because of the high quality of our fuel – of course, we have not scientifically verified that claim.
What are your thoughts on the role for a renewable liquid fuel in domestic heating?
We absolutely back the industry campaign for a Renewable Liquid Heating Fuel Obligation scheme. And we’re totally ready to go – we can start blending renewable liquid heating fuels at our bonded warehouse today. Not every company has that kind of blending facility, so it’s a real advantage. Plus, it means a huge cut in CO2 for more homes across the nation who would be moving away from traditional fuel oils.
As for domestic heating specifically, while that’s not a market we directly service, we’d be more than happy to support our colleagues and distributors in getting these renewable liquid fuels out to homes.
How are your teams tailoring messaging and technical support to address the unique needs of each sector?
Whether we are speaking to a large rail firm, a port authority, or a small haulier, we just try to listen in the first instance. A lot of companies are coming to us having heard about HVO as a potential solution, and we try our best to educate them on their level. The wonderful thing about Prema is that you could be talking to a large regional brewery in the morning and someone with a fleet of 300 lorries in the afternoon. Our solutions are so diverse that we have had to move into a bespoke solution approach because what works for one company won’t work for another; we are moving beyond a one-size-fits-all, impersonal fuel solution.
What role do end-user education and awareness play in driving uptake?
It’s massive. It can be a big move for a company to begin trialling HVO, and understandably they need a lot of support to do so. All our conversations start with education around the practicalities of sustainable fuelling – from there, we can often tell which of our solutions, if any, is right for you from the types of questions you might ask.
Customer support
How do you help customers navigate carbon reduction, Scope 1/2/3 emissions, and ESG requirements?
There are serious concerns around the certification of sustainable feedstocks and products, and the result is a minefield for customers. Prema responds by being open and honest about our products and helping customers understand the importance of verifying suppliers claims.
Whether you are buying your fuel from Prema Energy or one of our competitors, everyone should be asking for traceable feedstocks and ethically verifiable sources of origin. We help many of our clients with the carbon accounting process, and we see it as a fundamental part of ensuring our fuel meets the standards we hold ourselves and our suppliers to.
Policy, regulation, and market drivers
What legislative or fiscal changes would you like to see to better incentivise investment and customer adoption?
I’ve mentioned this in other questions, but we would love to see the duty rate for HVO lowered.
It is the biggest barrier to wider adoption and decarbonisation across the sector. We hear it at every conference, event, and roundtable. We have been lucky enough to participate in active discussions with many associations, including BIFA, RHA and the RTFA, who we know are actively working to bring these requirements to the government, but it has, so far, been an uphill battle.
Do you see a risk of divergence between UK and EU policy approaches?
We believe it will be best for the EU and UK to stay aligned.
The more complicated the situation is, the more openings there are for unscrupulous companies to profit in grey areas, especially in the marine sector with the FuelEU regulation coming into wider force in 2026.
The outlook
How do you see the role of sustainable liquid fuels evolving in the UK and Irish energy mix over the next decade?
There is no silver bullet. “Green” hydrogen will have limited availability and should be reserved for the most difficult applications, such as railways to the far North where electrification cannot be justified. Similarly, the big question for electrification is: how is the electricity produced?
From an HVO perspective, we champion it as a stopgap for today, not letting perfection hinder progress. Ultimately, society and our supply chains are so entrenched with liquid fuels in a variety of forms that we cannot undo that overnight, and we want to bring our solution to the table.
What does success look like for your business over the next 5–10 years in terms of sustainable fuels?
We are on a mission to triple the number of litres we sell over the next three years, and we are on our current trajectory to do so.
Image credit: Prema Energy
