New red diesel rules in NI branded ‘cash grab dressed as environmental measure’

New red diesel rules in NI branded ‘cash grab dressed as environmental measure’

New rules restricting the use of red diesel come in today (April 1) but have been branded a government “cash grab dressed up as an environmental measure” by a representative of the construction sector.

Red diesel is standard diesel but taxed at a lower rate and dyed red to make it easily identifiable and is heavily used in the construction and manufacturing industries.

However, these industries will no longer be able to use it under new rules HM Revenue and Customs said are designed to help meet “climate change and air quality targets”.

Companies in those industries that use rebated red diesel in their vehicles and equipment will have to switch to standard diesel and pay more for their fuel.

Gordon Best, from the Mineral Products Association NI, said it will have a “significant” impact.

He said the cost of materials and spending in the food sector would increase as a result.

“People know red diesel is just white diesel with a dye so this not about the environment,” he said.

He said the move was “the correct policy at the wrong time”, as there are issues with the technology used in large industry vehicles and the unavailability of zero carbon fuels such as green hydrogen.

“We said: ‘At least phase out the rebate’,” he added.

“The cost to the Northern Ireland economy is going to be about £25m and it’s felt money would be better spent on energy transition in Northern Ireland.”

He claimed the move would affect businesses in rural areas that cannot connect to the electricity grid, which use generators fuelled by red diesel to create power, and significantly increase the risk of theft.

From 1 April 2022, red diesel can only be used for the following purposes:

  • For vehicles and machinery used in agriculture, horticulture, fish farming and forestry. This includes allowing vehicles used for agriculture to be used for cutting verges and hedges, snow clearance and gritting roads
  • To propel passenger, freight or maintenance vehicles designed to run on rail tracks
  • For heating and electricity generation in non-commercial premises, this includes the heating of homes and buildings, such as places of worship, hospitals and town halls; off-grid power generation and non-propulsion uses on permanently-moored houseboats
  • For maintaining community amateur sports clubs, as well as golf courses (including activities such as ground maintenance, and the heating and lighting of clubhouses and changing rooms)
  • As fuel for all marine craft refuelling and operating in the UK (including fishing and water freight industries), except for propelling private pleasure crafts in Northern Ireland
  • For powering the machinery (including caravans) of travelling fairs and circuses.