Question to the HM Treasury:

To ask the Chancellor of the Exchequer, pursuant to the Answer of 18 July 2022 to Question 35899 on Fuels: Prices, if he will make an assessment of the potential merits of introducing further financial incentives for switching to cleaner alternatives to red diesel; and if he will make a statement.

The Government announced in the 2020 Budget that it would be removing the entitlement to use red diesel from most sectors from April 2022. These are important long-term reforms, which ensure most businesses that used red diesel prior to April 2022 now pay the same amount of tax as ordinary motorists. This more fairly reflects the harmful emissions produced. These reforms are also designed to incentivise the development and adoption of greener alternative technologies, and improvements in the energy efficiency of vehicles and machinery.

To support the development of alternatives that affected businesses can switch to, the Government is at least doubling the funding provided for energy innovation through the £1 billion Net Zero Innovation Portfolio. From that portfolio, the Government announced the £40 million Red Diesel Replacement Competition, which will provide grant funding for projects that develop and demonstrate lower carbon, lower cost alternatives to red diesel for the construction, and mining and quarrying sectors. These sectors were chosen because they encompass 62% of the UK’s red diesel use. However, the technologies developed from this programme will also be applicable to other sectors to support decarbonisation, and the Department for Business, Energy and Industrial Strategy is planning a series of dissemination events in the future with industry and other affected sectors to spread awareness about the successes achieved and lessons learned through this programme.