This scheme will soon mandate fossil heating fuel suppliers to integrate renewable sources such as HVO, starting with modest targets that are expected to increase after review.
For the liquid fuel distribution industry in both the UK and Ireland, this marks a pivotal policy shift.
What is the scheme?
Launching as early as 2026 and running until 2045, the RHO will require suppliers of fossil heating fuels to ensure an increasing percentage of energy supplied comes from renewable sources.
Targets are set at 1.5% in year one and 3% in year two, with more ambitious mandates expected after the 2028-9 scheme performance and market review.
Objectives
Decarbonisation
The RHO compels suppliers of fossil fuels for heating to integrate renewables, reducing Ireland’s heating emissions.
Energy security
With over 70% of heating fuels currently imported, the scheme aims to strengthen Ireland’s energy independence by encouraging native production.
Alignment with national climate targets
The RHO will ensure that the renewable fuels used are produced from sustainable sources, contributing to Ireland’s decarbonisation goals.
Eligible fuels
The RHO will require obligated parties (i.e., suppliers of fossil fuel for heating) to meet their targets by incorporating renewable fuels, with HVO explicitly recognised.
Industry implications
The RHO has been broadly welcomed but some industry voices argue it needs to go further.
The Alliance for Zero Carbon Heating (TAZCH) advocates increasing the current rate from 1.5% to a 20% blend, claiming this could match the carbon savings of 160,000 heat pump installations – without the cost and disruption of retrofitting and grid upgrades.
Prior to the scheme approval, the group had also called for the liquid fuels and gas sectors to be separated into different schemes with a dedicated Renewable Liquid Fuels Obligation incorporating obligations for transport and heating.
Describing it as “excellent news for the liquid fuel sector”, OFTEC Ireland has welcomed the policy but also calls for a stronger mandate.
At a meeting with Minister Darragh O’Brien, the industry body urged support of a 20% blend of HVO with kerosene.
Timeline
- 2025: Finalise legislative drafting, EU and stakeholder consultations
- Early 2026: Scheme comes into force
- 2028–2029: First review and adjustments phase
The scheme will be administered by the National Oil Reserves Agency (NORA)
For the heating market, which currently accounts for over a third of Ireland’s energy-related emissions, the RHO Bill signals a paradigm shift: from fossil dependency toward a blended renewable future.
Image provided by OFTEC Ireland