The Red Diesel Ban: Knock-on effects to the waste management industry, is your business ready?

In just four weeks the construction sector will face a radical rise in costs with the red diesel ban coming into place, and waste management will be among the areas hit hardest. Crown Waste Management is working hard to keep the unavoidable price rises down!

A series of unprecedented events have seen fuel costs spiral: the coronavirus pandemic, a wider energy crisis driven by low supplies, and now war in Ukraine, are putting pressure on many industries, not least construction. From next month, these high prices will bite harder, as the ban on red diesel comes into force, causing a more than 90% jump in fuel costs.

Despite industry calls for the red diesel ban to be delayed in a series of last minute lobbying rounds, there is no sign of a last-minute about face on the move that has been planned since 2019. Meanwhile, with crude oil prices hitting US$115 a barrel in early March, a high not seen since 2013, white diesel prices have not only risen but are fluctuating more rapidly than ever. For energy-intensive industries like construction this could become an existential issue.

What is changing?

From 1 April 2022 it will be illegal to use red diesel in vehicles and machinery in the UK, except in very limited circumstances. From then, rebates on fuel will be withdrawn, meaning users will have to pay the full duty on white diesel resulting in a near doubling of the cost per litre.

The actual fuel will be the same, but in effect will cost twice as much: red diesel is simply diesel that has been dyed to indicate that it is rebated and is therefore subject to lower fuel duty than the white diesel used as fuel by road vehicles. Red diesel incurs lower fuel duty than white: 46.81 pence per litre less for red than white. Red diesel is also subject to a reduced 5% rate of VAT for supplies up to 2,300 litres.

Green alternatives to red diesel

From April onwards, only a very limited subset of industries will be allowed to continue using the cheaper red diesel – and construction is not among them. Waste management in particular will be affected. For most process plant and equipment the prospect of switching to alternative fuels is still some years in the future, due to a lack of alternatives that can match the flexibility and torque of diesel motors suited to managing heavy loads of waste management and recycling.

Across the UK market as a whole, skip hire prices are certain to rise, with fuel rising from 78 pence per litre to £1.50 per litre and rising fast! This will have an immediate and obvious economic effect on the industry.

Concern has also grown that the move could have the paradoxical effect of causing an increase in the percentage of waste sent to landfill.

​​Despite lobbying from the likes of the Environmental Services Association and Resource Management Association Scotland (RMAS), the government has insisted on pressing ahead. The Treasury is reported as saying it “did not find compelling evidence that the risks they identified of waste being diverted to landfill are likely to materialise”. 

How Crown Waste Management are keeping price rises to a minimum

The rise in fuel costs is bad news for construction, that goes without saying. However, Crown Waste Management is exploring alternatives to diesel, with the aim of increasing use of cleaner-burning fuels. 

In the meantime, Crown Waste Management is demonstrating its commitment to our customers by keeping our prices as low as possible. We are working hard to absorb as much of the extra fuel cost as possible, and by committing to the lowest possible prices we want to give you the confidence and clarity to do business in these times of rapid change.