INDUSTRY KNOWLEDGE
– best practice is to maintain the cleanliness of your tank both before and after a fuel delivery .”
IPU knows that many are looking to HVO as a fuel alternative , but David reminds us that : “ Despite HVO being a synthetic diesel alternative , it is classified as a fossil fuel and will therefore be eligible for the full rate of duty . Many may think that this newer , ‘ cleaner ’ fuel cannot fall victim to the same contamination problem found in diesel fuel storage – but it can . IPU is conducting an extensive , unbiased study with a focus on alternative fuels ahead of this rebate change .”
Preparing for the red diesel rebate changes
With the changes to red diesel entitlement coming up next April , and ahead of our broader analysis of the impact on our industry and your customers , we speak with David Bryce , area sales manager at the IPU Group . The group has been directly involved in the consultation process , with dialogue with HMRC , as well as with the final submission and is hosting a free webinar this month to share their understanding of the implications .
“ From 1st April 2022 , it will be illegal to put red diesel and other rebated biofuels into the tank of a vehicle , vessel , machine , or appliance that is not legally able to use it .
Only the following sectors remain eligible to use red rebated diesel from April 2022 :
• Agriculture , forestry , horticulture , and fishfarming
• Rail transport
• Fuel used for non-commercial purposesheating & power generation
• Community amateur sports clubs ( CASC ) and golf courses
• Sailing , boating & marine transport ( excluding private pleasure craft in Northern Ireland )
• Travelling fairs & circuses
Those no longer able to use rebated fuels will be required to use diesel or biofuel on which the full duty has been paid .”
As yet , there is no finalised legislation document and , with the changes due to come into effect in April 2022 , businesses have little time to be fully prepared despite the inevitable significant financial impact .
As David highlights : “ There is absolutely no doubt that those forced to stop using red diesel will feel the financial strain . Jumping from 11.14 pence per litre for red diesel to 57.95 pence for white diesel is a hefty and noticeable jump . For a business using 150,000 litres of diesel per year , that ’ s a staggering annual increase of £ 70,215 .
“ It might be tempting for current users of red diesel to stock up and future proof themselves for the next few years . However , fuel suppliers cannot :
• Agree to customers stockpiling fuel
• Agree to customers increasing usual order quantities
• Sell large volumes of red diesel just before the cut-off date .”
In our conversation David also highlighted the issue with ‘ pink diesel ’: “ The need for correct tank cleaning has never been higher . Sites , including the depot storage tanks of fuel oil suppliers , must be cleaned to remove all residue of red fuel . Not doing so could result in ‘ pink ’ diesel – a mix of white and leftover red diesel .”
Ensuring that all dye residue and contamination on tank walls has been removed will be incredibly important as “ putting clean fuel into a dirty tank will only speed up the contamination process and deterioration of fuel
Fuel stores will be a valuable target The changes to red diesel entitlement mean that many businesses will also have to consider a higher level of protection for their fuel : “ Switching over to white diesel is going to turn your fuel supply into liquid gold . Just like you wouldn ’ t leave your car unlocked overnight , you need to keep your stored fuel protected . Fuel tanks , particularly those above ground , at remote locations or unmanned sites , are prime targets for thieves .”
As a result , a fuel management system is something that many will now need to consider with the anti-theft monitoring , fuel condition monitoring and fuel level monitoring such a system affords .
IPU was directly involved in the consultation process and had an open dialogue with HMRC about the upcoming changes to red diesel entitlement and will be running a webinar on October 12th to give detailed information on the changes expected in April 2022 .
They will give first access to the findings of their study , a copy of the white paper on the changes and will answer questions live to those directly engaged in the changes . If you would like to book a place on the webinar you can contact IPU on 0121 511 0400 or by email : ipu @ ipu . co . uk
We look forward to hearing more on the subject of red diesel duty changes from all those involved across our industry in our November issue ‘ Industry Analysis ’.
Fuel Oil News | October 2021 13