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Encourage uptake of low carbon renewable fuels with GHG-based fuel duty says report

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A new study by the Zemo Partnership has shown how a greenhouse gas-based fuel duty could encourage uptake of low carbon renewable fuels in hard-to-electrify transport applications such as heavy non-road vehicles.

The Decarbonising Heavy Duty Vehicles and Machinery report explores a pricing mechanism for a fuel duty discount and the potential GHG emission benefits of the use of high blend renewable fuels (HBRF) in heavy vehicles.

The availability and costs of appropriate low-carbon, renewable technologies have thus far slowed the decarbonisation of heavy duty and heavy non-road vehicles, leading the transport decarbonisation membership body to release a report in 2021, highlighting the opportunities to quickly decarbonise said vehicles using high blend renewable fuels such as biodiesel and hydrotreated vegetable oil (HVO), cutting GHG emissions by 85%-90% compared with standard fossil diesel when produced from biogenic waste feedstocks. It highlighted that that with a market average of 30% HBRF, used in place of fossil fuels (diesel and natural gas) the sector could save an additional 46m tonnes CO2e over the next decade.

The new report, produced with support from the Renewable Transport Fuel Association (RTFA) and UKPIA, features results from a comprehensive analysis of the whole-life costs for HDV and heavy non-road vehicle fleets running on renewable fuel compared with conventional (fossil-derived) diesel. A “sweet spot” for a potential fuel duty was identified from this analysis – a point at which operators can make significant carbon savings at minimal cost to the Treasury, with duty reductions matching the value of carbon savings.

Zemo Partnership’s Head of Sustainability (one of the report authors), Gloria Esposito, said:

“This latest study builds on our earlier work, which showed the immense potential for sustainability-verified renewable fuels to cut greenhouse gas emissions in the short and medium term.

“Our successful Renewable Fuels Assurance Scheme addresses one of the barriers to uptake but if we’re going to realise their full potential for GHG reductions, the financial hurdles to the adoption of these fuels will also need to be addressed.”

Elizabeth de Jong, CEO of UKPIA said:

“Liquid fuels will be needed for a long time, especially for heavy duty vehicles where electric and hydrogen options aren’t yet ready. Low carbon liquids can reduce well to wheel GHG emissions by up to 90% now and can be delivered using our existing infrastructure.

“But to be attractive at scale to fleet operators, we need to see real incentives such as new duty rates that reward operators for using lower carbon fuels. I welcome this timely report from Zemo which assesses that changes to duty could offer a viable, early decarbonisation route for HDVs.”

The full report is available to download here

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