Reading, UK: The Cold Chain Federation is warning that the imminent removal of the red diesel rebate for Transport Refrigeration Units (TRUs) will lead to additional costs of £100m while promised financial help from the government has failed to materialise.
The removal of the red diesel rebate come into force on 1 April – less than eight weeks away.
The Federation has been discussing financial support for the transition with the government for the last two years. Suggestions include:
• buying incentives – one-off grants on specific zero emission technology trials or purchases (as seen when electric cars were in their infancy) scrappage grants for replacing older equipment, carefully designed with the industry to maximise their effectiveness and avoid the issue of ‘stranded assets’.
• tax incentives to ensure uptake of emission free technology, such as VAT breaks or extension of ‘super capital allowance’ for qualifying lower emission technology beyond March 2023.
Cold Chain Federation chief executive Shane Brennan said: “Our nation has relied heavily on the resilience, ingenuity and sheer hard work of cold chain businesses over the past two years, their efforts have been nothing short of heroic. They have kept the fresh and frozen supply chain running throughout the pandemic and Brexit, soaking up challenging increases in energy costs, recruitment and wages, and other fuel increases as well as operational uncertainty and unprecedented disruption. Their transport refrigeration tax hike is just weeks away and the support Government repeatedly promised to help the transition has never materialised. These vital businesses are being neglected.
“The cold chain industry is working towards a net zero future and businesses want to transition to cleaner equipment, but the alternatives to diesel for vehicle refrigeration are still limited in number, relatively untested and prohibitively expensive. Government should be supporting businesses to invest in the development of reliable, widely available alternatives for vehicle refrigeration as it promised, and we will keep pressing for this support to come through urgently.”
The Federation has been advising its members to plan well ahead of 1 April, For companies running cold storage or manufacturing the advice has centred on ensuring that machinery, such as backup generators and processing plant, comply with the new rules.
Cold Chain Federation policy director Tom Southall said: “The changes to Government red diesel regulations mean hauliers transporting chilled and frozen products will have to pay more than double to power the tens of thousands of fridges that manufacturers, retailers and consumers rely on to keep food safe and prevent waste across the supply chain. We estimate this change will add up to £100m in additional cost to the supply chain. We are advising temperature-controlled distribution operators to ensure you have plans to use up stocks of bunkered red diesel b. 31st March, contact your customers to make them aware of the increased cost and check contractual arrangements with customers to ascertain ability to raise cost of service in line with fuel inflation.”
Details on all the government’s requirements related to the red diesel change on 1 April, such as running down rebated fuel and disposing of surplus red diesel, can be found at: www.gov.uk/government/publications/changes-to-rebated-diesel-and-biofuels-from-1-april-2022/changes-to-rebated-diesel-and-biofuels-from-1-april-2022
