Anthony Browne MP is chairman of the All Party Parliamentary Group on the Environment and a member of the Treasury Select Committee.
As you drive to the dealership, selling your diesel car to avoid the many new charges and taxes that are coming in before it is banned outright, you might notice the diggers at a construction site chundering out clouds of brown smoke.
And as you wonder how to heat your house when certain coals and woods are banned because of air pollution, you may be surprised to learn that many commercial heating and generating systems use highly subsidised super-cheap diesel. You have to pay air passenger duty to reduce aviation pollution, but the airport vehicles that load the planes and tow them around use virtually tax-free diesel.
If you worry about buying locally sourced produce to reduce food miles, you might be surprised that the supermarket refrigeration lorry is almost certainly powered by – you guessed it – almost duty free but highly polluting diesel. The lorries would have been loaded by fork lift drunks fuelled by… yes, you got it.
As the UK gets serious about tackling the duel threats of climate change and air pollution, ordinary consumers are quite rightly buckling down and changing behaviour, under pressure of heavier taxes, charges and imminent bans. It is a tribute to us as a nation that such little fuss is being made as the UK genuinely leads the world.
But large swathes of industry are still fuelled by “red diesel” – very low cost diesel with an 80 per cent reduction in tax, which is generally allowed for all “non road” uses (which in fact includes many uses on roads, confusingly).
Supermarket refrigeration lorries, rail freight, cranes, diggers, fork lift trucks, power generators, heating plants, road graders, asphalt spreaders, gritters and snow ploughs, as well as inland water pleasure craft all benefit from this low tax fuel – as do farmers (which I will come to). The uses of this cheap and dirty fuel have spread far and wide, and now makes up 15 per cent of all diesel used.
So powerful is the financial incentive to use the fuel that extraordinary detailed rules – and the red dye – have been introduced to stop fraud and abuse. So industry has evolved to take advantage of it. The supermarket refrigeration lorries you see cruising around our motorways and towns typically have two motors – a normal “white diesel” one that powers the lorry on the road which has to pay normal tax, and then a “red diesel” one that uses the low cost fuel to provide the refrigeration.
The cheap diesel system was introduced because when the government started taxing fuel in 1928 to pay for motoring costs, it decided to exempt non-road use of diesel. Gradually over the years, the users who could benefit from the tax break have spread. However, the reason to tax diesel has changed. The main aim now it to reduce greenhouse gas emissions and air pollution: the justification for the tax break has largely gone up in smoke.
This low tax diesel has many drawbacks. The government loses £2.4 billion revenue a year – a huge amount. Most of the engines burning red diesel do not meet emissions standards required of cars – hence the brown clouds coming from diggers. For the same amount of diesel burnt, they are estimated to emit 93 times as much toxic Nitrogen Oxide and 165 times as much particulate pollution. By one estimate, there are 26,000 refrigeration lorries in the UK powered by red diesel, but they emit as much polluting particulate matter as 3.2 million cars.
With such cheap diesel, industry has no incentive to clean up its act. Fuel is so cheap, construction workers often just leave their engines running. A government consultation last year highlighted that many companies providing clean technologies can’t compete because red diesel is so artificially cheap. Some retailers such as Marks and Spencer are moving to cleaner liquid nitrogen refrigeration in their lorries, but most stick with the cheap and dirty diesel. Manufacturers are keen to sell electric forklift trucks and airplane towing vehicles but struggle to make inroads against red diesel.
Although there is little public awareness of the issue, successive governments have been wanting to tackle it, but have always pulled back because of worries about the impact on farming – most agriculture equipment from tractors and combine harvesters are powered by red diesel. Those worries are real and not just political. Many farmers are on the borderline of profitability. They operate in open countryside where air pollution is minimal. They also now have to cope with moving away from Common Agricultural Policy subisidies, and an uncertain international trading environment.
But, critically, agriculture only accounts for 25 per cent of red diesel use. So here is a proposal: the government could ban red diesel for non-agricultural uses, and achieve 75 per cent of the benefits with few of the drawbacks.
So as Rishi Sunak, the new Chancellor, puts together his first budget for March 11th, and as the government charts its way for the UK to became carbon neutral by 2050, now is the time: the government must end the dirty diesel tax break.