Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of reducing the fuel duty rate of Hydrotreated Vegetable Oil for heating to match that of kerosene heating oil.

Hydrotreated vegetable oil (HVO) is a form of renewable diesel and therefore benefits from the rebated duty rate of 10.18 pence per litre (ppl) when used for domestic heating. Kerosene is fully rebated. In contrast, the fuel duty rate for road diesel and petrol is 52.95 ppl.

Concerning the Government’s position on HVO’s potential as a heating fuel, the Government's biomass policy statement of November 2021 set out that deployment of biofuels, such as HVO for off-gas-grid heating, will be limited by constraints on the global availability of sustainable biomass feedstocks, and potential alternative uses to decarbonise other sectors of the economy. Low temperature heat pumps offer a scalable way of decarbonising heating. However, the Government recognises that biofuels such as bioLPG and HVO may play a role in future off-gas-grid decarbonisation, particularly for properties that are not suitable for a heat pump.

The forthcoming Biomass Strategy will review the amount of sustainable biomass available to the UK, including liquid biofuels such as HVO, and how this could be best used across the economy to achieve our net zero target.

As with all taxes, the Government keeps the tax treatment of HVO under review.