What is happening on 1st April 2022?
Rebated gas oil, more commonly known as red diesel, will no longer be available to buy for your diesel generator. Current UK government legislation states that commercial businesses will no longer be able to purchase red diesel from 1st April 2022.
Why?
Red diesel is mainly used for (off-road) purposes and to power life safety or business critical emergency generators. It accounts for around 15% of all the diesel used in the UK and produces nearly 14 million tonnes of carbon dioxide a year.
In the 2020 Budget, the UK government announced it would remove the entitlement to use red diesel and rebated biodiesel in most sectors from 1st April 2022 to help meet its climate change and air quality targets. The tax changes being introduced from the same date will ensure that most red diesel consumers use fuel taxed at the standard rate for diesel.
What if I have already purchased red diesel for my generator?
Due to the proposed changes in legislation with regards to the supply of red diesel (i.e., commercial sites will no longer be entitled to use rebated fuel from 1st April 2022), the government has now stated that fuel purchased from 10th June 2021 must be used by 1st April 2022, or the duty will need to be paid on this fuel. Red diesel bought prior to 10th June can remain in the tank and be used without any additional restrictions. We would advise that all purchased records are retained for any possible HMRC audit.
What do the changes mean for me?
You will not be able to legally buy red diesel from 1st April 2022, so you will need to look for an alternative to red diesel to top up and run your generator.
Will ‘white diesel’ work in my generator?
Yes. From 1st April 2022, you can simply buy white diesel to power your generators. White diesel can also be mixed with red diesel fuel currently in your tanks, as they are chemically identical and will pose no risk to your equipment.
Will I need to drain down my stock of red diesel and clean my tanks prior to 1st April 2022?
No. To quote the Government’s Policy Paper:
“So that businesses can use up red diesel taken in before the change, for example, HMRC will have the ability to disapply the liability to seizure of fuel where they can be satisfied that the user has not taken red diesel into the fuel system after the change in rules for usage.”
However, you may wish to drain down and dispose of your red diesel fuel and clean the tank if you want to move to an alternative fuel (subject to confirmation from the engine OEM that alternative fuels are compatible).
Likewise, if your tank has been neglected over the years, you could take the opportunity to clean your tanks prior to moving to a new type of fuel.
What alternatives to red diesel are available other than white diesel?
The use of Gas to Liquids (GTL) or Hydrotreated Vegetable Oil (HVO) fuels are becoming more common, but be aware that not all engines operate on these types of fuels.
GTL is a diesel alternative that is manufactured from natural gas that purports to be cleaner-burning and considerably less harmful to the environment. It claims to be a ‘drop-in’ fuel, which means that it can directly replace conventional diesel fuel without the need for modifications.
HVO is a fossil free, Fatty Acid Methyl Ester (FAME)-free paraffinic renewable diesel fuel, made from sustainable raw materials, which is suitable in a wide range of fleet, plant and machinery including road vehicles, construction equipment, generators, and industrial power systems.
For more information or advice, please contact our Vertiv specialists on generator fuel systems, or email GB.Hello@vertiv.com.
To read more about the reform of red diesel and other rebated fuel entitlement, visit the UK government site.
Disclaimer: all the information provided above is accurate based on the HMRC legislation latest draft and is subject to change once the final submission has been released.
