Business leaders call on ministers to cut tax on clean fuels to replace diesel

Business leaders and environmental campaigners have called on the Government to cut duties on clean replacements for diesel.

In a letter to transport minister Jesse Norman, a group of more than 30 signatories warned of the “urgent imperative” to reduce harmful pollutants in the atmosphere.

Industry leaders argued that the Government should support cleaner fuels while electrical vehicle infrastructure like charging capacity is developed.

The letter, led by sustainable fuel supplier Green Biofuels, welcomed the Government’s ambitions to invest in green initiatives as set out in the Spring Budget.

However, the signatories added that there has been a “continued absence of action that could support the wider rollout of advanced biofuels such as renewable diesel”.

They argued that price reductions in renewable diesel fuel can be achieved at no cost to the taxpayer, with consumers encouraged to switch to sustainable alternatives by creating price parity with diesel.

“While some incentives do exist in the UK, these do not achieve price parity with diesel,” the letter said.

“As such, we believe your department, in collaboration with the Treasury, should look at reducing duties and creating tax incentives to catalyse the switch to renewable diesel.”

It comes as the Ultra-Low Emissions Zone (Ulez) was rolled out across London on Tuesday amid a political debate over taking measures on air pollution versus the cost impact on drivers.

The signatories called on the Government to consider the Republic of Ireland’s tax reclaim scheme, which directly reduces the cost of advanced biofuels to the same level as diesel across a range of functions including maritime, rail and micro-generation.

The letter said that HVO, renewable paraffinic diesel made from renewable raw materials, is a “drop-in” replacement for it can be used immediately in diesel engines without any modifications.

When compared to fossil diesel, HVO sees greenhouse gas reductions of up to 90% and particulate matter (PM) emission reductions of up to 80%, it said.

Signatories included leading figures in firms such as infrastructure contractor Skanska and hauliers JW Suckling Transport Limited as well as from clean air campaigner and CEO of Enjoy the Air, Kate Barnard, and environmental campaigner, Dominic Dyer.

Julian Keites, director of sustainability at Green Biofuels, said: “Electric vehicles are not the be all and end all of sustainable transport, and scrapping existing vehicles is not a green solution.

“Sustainable alternatives to harmful diesel fuels – used particularly in heavy goods vehicles, trains and maritime – have a vital role to play in rapidly cutting greenhouse gas emissions and improving air quality.

“The collaboration of support shown by uniting this diverse range of business leaders and environmental campaigners demonstrates the positive and practical role advanced biofuels play in the future of the UK’s transition to net-zero.”

Meanwhile, Dominic Dyer, environmental campaigner, said: “Rather than rushing to yet more reliance on oil and gas, the Government urgently needs to listen to industry figures who are helping to lead the UK’s transition to net-zero through sustainable fuels.

“This unified call for action clearly demonstrates the strong determination of both business leaders and everyday consumers who want to do the right thing for the environment.

“A duty cut for clean fuels, paid for by increased duty on dirty diesel, is essential if the UK is to cut greenhouse gases quickly.”

The PA news agency has contacted the Department for Transport for comment.