In the UK’s March 2020 Budget announcement, the Chancellor announced the partial removal of the entitlement to use red diesel and rebated biofuels from April 2022, to encourage key sectors using red diesel to decarbonise. As part of this announcement, the Department for Business, Energy and Industrial Strategy (BEIS) was asked by HM Treasury (HMT) to develop an innovation programme with the sector to develop replacement low-carbon alternatives at a price that is competitive with fossil fuels.
In late 2020, BEIS commissioned a study, which was awarded to the E4tech-Cenex consortium, with the aim of engaging with the non-road mobile machinery and off-highway equipment sectors, the low-carbon fuels industry, and the end-users who will be most impacted by the removal of this rebate, in order to gather opinions on the scope of the innovation programme that BEIS should pursue.
Workshops were held with stakeholders in early 2021 to understand the challenges faced by the sector and to gain feedback on the principal features of a red diesel replacement innovation programme, suitable for the industry it is addressing.
BEIS used the findings of this study to inform the scope and design of the Red Diesel Replacement competition.