From April 1st, many businesses will no longer be able to use red diesel to fuel vehicles and equipment. These changes will significantly impact those that currently rely on red diesel, as their fuel prices will inevitably rise.
We’ve previously investigated who these changes will affect and provided guidance on how businesses can prepare. However, if businesses can no longer use red diesel then what’s the alternative? The upcoming changes may cause some businesses to consider greener alternatives, such as EV technology but is this actually a viable option?
What are the alternatives to red diesel?
It’s likely that most businesses will switch from red diesel to white diesel as it’s the most accessible option. These fuels are the exact same, however red diesel has a red dye and chemical markers added to limit its misuse in road vehicles.
Greener alternatives, such as EV technology, can also be used as a substitution for red diesel. By using greener alternatives, businesses can reduce the amount of money they spend on fuel and help the UK Government to achieve its goal to reduce carbon emissions.
How accessible is EV technology?
EV vehicles and equipment are now regularly being used in the UK and are becoming increasingly popular with businesses. The technology and infrastructure have been developed substantially over the last few years, making them a more viable option for fleets. According to research by IDTechEx, the industrial and commercial EV sector has grown by 60% and is set to grow 4.5 times in the next decade. This shows that there is an increasing demand for electric vehicles and equipment and the technology is more accessible for businesses than ever before.
The construction industry, in particular, is moving towards EV technology as a result of the diesel restrictions and increasing public interest to reduce carbon emissions. JCB recently introduced the 19C-1 E-TEC mini excavator which has zero emissions. This machine allows contractors to work effectively within enclosed spaces with no requirement for costly exhaust extraction equipment. It’s likely that this will have a knock-on effect and encourage other manufacturers to develop electric equipment.
Although electric construction equipment is more frequently being used, there are still hurdles to overcome, particularly when bringing battery power to larger machines. The two main concerns about electric equipment are the long charging times and the access to on-site power. Recharging batteries can be very time-consuming, which may cause delays and cost you business. Another challenge the construction sector will likely encounter is the lack of accessible charging points in rural areas. This means that equipment will either need to be transported so it can be charged, or a charging point will need to be installed on-site which can be costly.
How affordable is EV technology?
As fuel prices are currently at an all-time high, many businesses are considering electric alternatives for their fleets. The Government is helping to make these more accessible by extending the plug-in van and truck grant schemes to 2024-25. Currently, electric vehicles are more expensive than their diesel counterparts, but these schemes will help make them more affordable for those looking for a greener alternative to red diesel.
In addition, it’s been estimated that fleets can expect savings of 20-30% in repairs, servicing, and maintenance costs plus additional Vehicle Excise Duty and Class 1A National Insurance benefits. Major savings can also be made in everyday running costs as you’ll no longer need to spend money on fuel, allowing you to reinvest in other areas of the business.
What are the benefits of EV technology?
Aside from saving your business money, there are numerous other benefits to EV technology.
EVs allow businesses to cut carbon emissions and therefore reduce their environmental impact. This will be particularly beneficial for those sectors that have previously been reliant on red diesel as they’ll be able to improve their environmental credentials by operating a green commercial fleet.
Red diesel is responsible for 14 million tonnes of CO2 released every year and the construction and infrastructure sectors alone were responsible for 7% of NOx emissions in 2018. Therefore, by switching to EV technology, businesses will have a beneficial impact on the environment.
Another benefit of this technology is that unplanned vehicle downtime is reduced which could help to save your business money. This is because EV vehicles have significantly fewer moving parts compared to their traditional fuel counterparts and so breakdowns are less frequent.
Should the red diesel changes be delayed until EV technology has progressed further?
The UK Government are hopeful that the red diesel changes will help to reduce carbon emissions. However, many believe that these changes should be delayed as alternative fuel sources are not readily available to many industries. This would give companies the time needed to invest in new, greener technology as and when it becomes accessible, and this could prevent businesses from having to cease trading.
Gordon Best, regional director of Mineral Products Association NI (MPANI) has argued, “the policy is flawed and does not encourage a move to zero-carbon fuels, as firms will simply switch to standard white diesel, with exactly the same carbon content.”
This could also have a significant financial, operational and investment impact on businesses that will need to rely on higher-priced white diesel due to the limited availability of alternative fuels.
On the other hand, many sectors are already using greener technology for their vehicles and equipment. Laing O’Rourke recently announced that it will replace red diesel with hydrotreated vegetable oil (HVO) in all its plant machinery before the end of March which they claim will reduce emissions from plant machinery by up to 90%. This shows that businesses can use greener technology as an alternative to red diesel, but this may not be the most suitable option for every fleet.
Reliable and renewable fuels are undeniably the future of fuel. Businesses should therefore start to consider greener alternatives before the UK bans the sale of new petrol and diesel vehicles in 2030. We are working on an EV option to help our customers make the switch to electric. You can register your interest for this product here. Nevertheless, it’s important to ensure that you use the most efficient fuel for your fleet, whether that be EV, white diesel, or petrol. We recommend that you compare the variety of fuels available before making a final decision.
Matt DoddsWith over 14 years of experience across two of the leading fuel card companies in the UK, Matt Dodds joined RFC Edenred to help lead the development of products to support our customer's move to EV and other alternative fuels, a transition he feels passionately about.