RMAS, which represents Scotland’s SME resource and waste management companies, said the “inevitable” fuel price increase will see costs for its members rising, “with the cost inevitably trickling down to consumers”.
The government said in 2020 that those entitled to use red diesel pay a duty rate of 11.14p per litre, “significantly less” than those using standard road fuel diesel, which has a duty rate of 57.95p.
Protests from across the waste sector have thus far fallen on deaf ears, with the Treasury insisting it has not found “compelling evidence” that scrapping the lower rate of red diesel will increase the cost of recycling (see letsrecycle.com story).
The government has decided to implement the reforms from April 2022, saying the tax is holding back investment in alternative fuels.
The ban on red diesel comes with good intentions but it’s ill-conceived
- Brian Ritchie, RMAS chair
Costs
In a statement this morning (7 January), RMAS reiterated concerns that the removal of the red diesel tax exemption will drive up the cost of recycling as members will be faced with significantly higher charges.
The association also warned it could lead to increased criminality from “unscrupulous operators”.
Brian Ritchie, chair of RMAS said: “The ban on red diesel comes with good intentions but it’s ill-conceived with no suitable green fuel alternatives available at present.
“Some of the estimated 15% cost rises facing our members will have to be passed down the line to customers, suppliers, and contractors.
“This will ultimately hit consumers further contributing to the current cost of living crisis in the UK.
“We call on the UK government to re-think this flawed policy and either delay its implementation or provide additional support to offset its impact on the waste management sector and avoid the economic and environmental consequences that will inevitably follow.”
Plant
Under the government’s plans, the use of the lower-taxed red diesel will be banned in in mobile, static and process plant and equipment for a number of industries.
Waste management, construction and mining companies will be among the sectors impacted, while agriculture, horticulture, fish farming and forestry sector operators will be exempt from the new rules.
RMAS claimed that while the red diesel ban is “being promoted as a green policy to aid the transition to sustainable forms of fuel”, the lack of any viable alternatives will leave most waste and resource management companies reliant on white diesel, which will significantly increase operating costs.
A poll of the organisation’s 72 members suggests that costs will rise by around 15%, with companies facing additional fuel expenses of between £100,000 and £400,000 per year.
RMAS believes this could also have a detrimental impact on the environment “as more illegal operators seek to undercut compliant businesses, leading to increased incidences of fly-tipping and other forms of illegal waste dumping”.
The organisation is calling for a re-think on this policy urging ministers to delay the ban or provide additional support for the waste management sector, which was excluded from the UK government’s £40m red diesel replacement competition announced last summer.
This blunt form of taxation is only going to damage our ability to recover vital resources
- Robin Stevenson, Hamilton Waste & Recycling
‘Blunt’
Highlighting the concerns of RMAS member companies, Robin Stevenson, managing director at Hamilton Waste & Recycling, said: “The forthcoming red diesel ban is being billed as a ‘green tax’ but it has the potential to be quite the opposite.
“Currently there aren’t viable alternatives to the diesel plant and machinery we rely on to transport, process and recycle waste on site.
“As a result, the only possible outcome is that this tax will increase the cost of recycling and therefore make it less appealing to waste producers.
“Our business is already 100% carbon neutral so this blunt form of taxation is only going to damage our ability to recover vital resources and unlock their environmental and commercial value.”
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