The Cold Chain Federation is urging hauliers to finalise their preparations for a major cost increase when Government ends the ‘red diesel’ rebate for Transport Refrigeration Units (TRUs) on 1 April.
The CCF, which represents businesses which store and distribute chilled and frozen food, pharmaceuticals and other products, said these businesses are facing imminent increases in fuel costs as a result.
Red diesel, whichaccounts for 15 per cent of total diesel for the UK,isthe term used for gas oil that is intended for use other than as fuel in road vehicles.
The CCF accused the Government of reneging on its promise to support the transition away from using diesel for refrigeration in transport vehicles and has been advisingits members to plan well ahead of 1 April how to mitigate the rise in fuel costs
It also urged those running cold storage or manufacturing to ensure that machinery such as backup generators and processing plant comply with the new rules.
CCF policy director Tom Southall said:“The changes to Government red diesel regulations mean hauliers transporting chilled and frozen products will have to paymore than double to power thetens of thousands of fridges that manufacturers, retailers and consumers rely on tokeep 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 by the 31 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 foundhere.
Cold Chain Federation Chief Executive Shane Brennan added: “The 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 CCF said that over the past two years it has called on Government to introduce the following measures to support hauliers with the transition away from red diesel:
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’ (assets that have suffered from premature devaluation due to environmental policies).
Tax incentivesto ensure the uptake of emission-free technology, such as VAT breaks or the extension of ‘super capital allowance’ for qualifying lower emission technology beyond March 2023.