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REA urge Government to postpone the proposed change to
red diesel policy for five years;
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Organics recycling sector’s entitlement to use red
diesel ends in April 2022;
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Businesses warn that changes could result in
redundancies and closures.
The Association for Renewable Energy and Clean Technology (REA)
is urging the Government to postpone the proposed changes
to red diesel policy for five years until 2027.
The waste sector is set to lose the entitlement to use rebated
fuel (red diesel) from 1st April, a move which would likely see
already razor thin profit margins evaporate, resulting in
businesses having to make redundancies or cease trade entirely.
The REA say that, without an alternative to diesel currently
available to the organic recycling sector, the change will
dramatically increase costs to businesses whilst simultaneously
failing to deliver the intended environmental benefits. The
policy will also create unfair competition - agriculture and
horticulture sectors remain eligible for red diesel - meaning
some on-farm AD and composting sites will be able to charge lower
gate fees for accepting waste than off-farm sites who cannot.
While the REA strongly supports the transition to sustainable and
renewable fuels, they say that removing the organics recycling
sector’s entitlement to use red diesel at this time would add an
unacceptable and unaffordable financial burden on to businesses
that are already facing increased costs due to HGV driver
shortages, energy prices rises (which are set to increase even
further), and the need to meet increasing environmental
standards.
Until there is a viable alternative to diesel in the organics
recycling industry, the REA and its members are calling on the
Government to postpone the proposed change to red diesel policy
for five years until 2027, to enable the development
alternative-fuelled vehicles and machinery and clear guidance on
the permitted use of red diesel.
Jenny Grant, Head of Organics and Natural Capital at the
Association for Renewable Energy and Clean Technology (REA),
said:
“While we strongly support the transition to sustainable and
renewable fuels, removing the organics recycling sector’s
entitlement to use red diesel at this time would add an
unacceptable and unaffordable financial burden on businesses
which are already facing a perfect storm of worsening cost
pressures.
“We have been in constant contact with our members who are
warning about the impact this change would have on their
business. Businesses are facing incredibly difficult decisions,
with many saying they will have to make redundancies or even
cease trading entirely.
“That is why we are urging the Government to delay the
proposed reform to red diesel policy for five years until 2027 to
enable the development of viable alternative-fuelled vehicles and
machinery.
“The Government must postpone this change - jobs and
businesses are on the line.”
Gary Short, Managing Director of Shorts Group Ltd,
operating throughout Berkshire, Bucks and Surrey, said:
“The financial impact across Shorts Business will be £0.5m
per annum - inevitably this will impact on staffing levels as we
will not be able to cover these costs by price increases and
savings will have to be sought.
“Given the inflationary pressures we are all facing and the
uncertainty we have navigated through the pandemic, this fuel
change is just the most unwelcomed tax at a time when businesses
need support and the country needs to get back up and running.
The timing of this is ill-thought-out.”
Grant Keenan, Managing Director of Keenan Recycling,
based in Aberdeen, said:
“The removal of red diesel entitlement will cost us around
£300,000 a year. If councils are unwilling to accept a rate rise
under existing terms we will have to consider letting staff go to
manage this cost.
“We have investigated investing in electric machines, but the
cost is prohibitive. We have also considered alternative fuels,
such as HVO (hydrotreated vegetable oil), but this is more
expensive than diesel. In short, there is no ‘green’ alternative
at present.”
—ENDS—
Notes to editors
A briefing on the red diesel entitlement changes is attached to
this email.
The REA is also calling for increased funding for R&D into
vehicles equipped for the sector that do not run on fossil fuels
and incentives for their uptake.
