– Sweden passed a tax exemption for biofuels in 2018
– 20% of Sweden’s transport fuels are biofuel
– Price will determine whether UK fuel consumption will switch to biofuels
Speedy Fuels, a UK fuels and lubricants supplier, is calling on the UK government to mirror Sweden’s approach to switch from fossil fuels to biofuels to help meet its net-zero carbon target by 2050.
In 2017, the Swedish government passed legislation that made biofuels tax exempt. This led to a 124% increase in HVO biofuel sales in October 2017 compared with October 2016.
Consequently, renewable fuels accounted for 20.4% of all transportation fuel supplied to vehicles during 2017, a new Swedish record1. Green diesel alternatives, such as biodiesel and HVO biofuel took up 28% of the diesel market, of which 83% was HVO biofuel.
In the UK, biofuels are subject to the same taxes and duties as regular diesel (currently 57.95p per litre plus VAT at 20%)2; so while they are significantly cheaper than regular diesel, they’re still more expensive than gas oil. Due to fuel tax applied to biofuel, green diesels are widely available, but at a premium roughly 35% more expensive than red diesel.
As a result, even those businesses with the greenest intentions are finding it hard to include biofuels in their budgets.
Danny Woods, operations manager, Speedy Fuels commented: “”Whilst there is considerable interest in HVO and other fossil-free alternatives, the price is still a massive hurdle to widespread adoption of greener fuels.
“As part of a wider group, we’ve been able to minimise supply and storage costs, passing these savings to our customers. But when the majority of a fuel’s price is fuel duty and other taxes, there’s little more that we and other suppliers can do to encourage customers to make the switch. We already all we can to reduce CO2 emissions by offsetting our delivery mileage.
“The government has set a target to be carbon-neutral UK by 2050, but renewable, cleaner fuels are available now. The government is urged to follow Sweden’s example and show that its pledges are more than just hot air.”