Scrapping red diesel will raise council waste costs, says Re-Gen Waste

UK Government plans to scrap the lower rate of fuel duty on red diesel from April 2022 will increase council waste bills, says Joseph Doherty, Managing Director of Re-Gen Waste Ltd. The company, which processes waste for councils across the UK, will see an extra £200,000 added to its fuel bill per annum. With red diesel duty rates moving from 11.14 pence per litre (ppl) to a white diesel duty rate of 57.95ppl, Re-Gen Waste’s fuel costs are set to increase by 237 per cent.

Red diesel is the term used for gas oil that is intended for uses other than as fuel in road vehicles, and is used by many waste and recycling companies to power their heavy machinery. The UK government has acknowledged that the proposed changes to the tax treatment of red diesel will impact local councils and has vowed to engage with them as part of the Red Diesel Consultation, which closes on 1 October 2020.

Doherty said: “As we transition to the new rules, these increased fuel costs will ultimately have to be passed to customers in the short term, doubling the cost per tonne of waste to £1. Fortunately, we are already making efforts to adopt cleaner, greener technologies within the plant, so that we can absorb these costs in the longer term. However, this may take longer than two years to implement and the new technology may not be fully operational in that time frame.

“We can’t argue with the motivation behind removing the entitlement to use red diesel; the desire to tackle climate change, ensure that businesses pay fairly for the harmful emissions they produce and incentivising them to improve their energy efficiency, is something every government must do.”