Biofuels: Excise Duties

Treasury written question – answered on 11th January 2022.

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Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, what assessment he has made of the potential environmental implications of restricting the use of rebated Hydrotreated Vegetable Oil in certain diesel-powered vehicles, vessels and other appliances from 1 April 2022.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, what assessment he has made of potential implications for respiratory health of restricting the use of rebated Hydrotreated Vegetable Oil for use in certain diesel-powered vehicles, vessels and other appliances from 1 April 2022.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, with reference to his policy of restricting the use of rebated Hydrotreated Vegetable Oil in certain diesel-powered vehicles from 1 April 2022, what steps he is taking to to introduce a harmonisation period to avoid potential pressures on fuels supplies.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, with reference to his policy of restricting the use of rebated Hydrotreated Vegetable Oil in certain diesel-powered vehicles, ​whether he plans to provide support to businesses which are running down stocks of HVO, including costs of cleaning out storage tanks, in preparation for the introduction of the duty harmonisation of fuels ahead of 1 April 2022.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, if he will amend the Biofuels and other Fuel Substitutes Excise Notice 179e to include Hydrotreated Vegetable Oil from renewable feedstocks under paragraph 5.5; and if will he make a statement.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, if he will amend the Governments' definition of biodiesel to include the classification of Hydrotreated Vegetable Oil.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, if he will grant waivers to dye (mark) rebated fuels such as Hydrotreated Vegetable Oil to support (a) a transition to duty harmonisation on 1 April 2022 and (b) the use of low carbon fuels on major projects including (i) HS2 and (ii) the Thames Tideway Tunnel.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, what steps he is taking to mitigate potential disruption to the fuel supply chain resulting from his Department's planned restriction regarding the future use of Hydrotreated Vegetable Oil from 1 April 2022.

Photo of Helen Whately Helen Whately The Exchequer Secretary

At Budget 2020, the Chancellor announced that he will remove the entitlement to use rebated fuel from most sectors from April 2022. This will more fairly reflect the negative environmental impact of the emissions they produce and help to ensure that the tax system incentivises the development and adoption of greener alternative technologies.

During the consultation period, the Government engaged directly with a wide variety of organisations, including affected sectors and fuel suppliers, to discuss these tax changes. HMRC have published interim guidance on the implementation of the changes to the tax treatment of rebated fuel, which is available at:

www.gov.uk/government/publications/changes-to-rebated-fuels-entitlement-from-1-april-2022

The Government has not announced any changes to the treatment of hydrotreated vegetable oil (HVO) and so it will continue to be taxed at the same rate as diesel and required to be marked if supplied for rebated use. The rebated rate applies to qualifying uses, not to specific fuels, so sectors losing their entitlement will no longer benefit from the rebate regardless of what fuel they use.

As with all taxes, the Government will keep the tax treatment of HVO under review. However, there are no plans at present to change treatment as the Government uses the Renewable Transport Fuel Obligation (RTFO) to incentivise the use of low carbon fuels and reduce emissions from fuel supplied for use in transport and non-road mobile machinery. HVO is eligible for Renewable Transport Fuel Certificates under the RTFO, and is eligible to receive twice the reward in certificates under this scheme where it is produced from waste.

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