AD sector warns of job losses over proposed red diesel changes

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Proposed changes that will see the UK waste sector lose its entitlement to use red diesel from 1 April could massively impact the UK’s anaerobic digestion (AD) sector.

The Association for Renewable Energy and Clean Technology (REA) is urging the government to postpone the proposed changes for five years until 2027. The organisation said if the changes go ahead, already ‘razor-thin’ profit margins in the waste sector could ‘evaporate’, resulting in redundancies or even businesses ceasing trade.

Without an alternative to diesel currently available to the organics recycling sector, the REA said the change will dramatically increase costs to business while simultaneously failing to deliver the intended environmental benefits.

The policy would also create unfair competition, the Association argued, as agriculture and horticulture sectors remain eligible for red diesel, meaning some on-farm AD and composting sites will be able to charge lower gate fees for accepting waste than off-farm sites that cannot.

“While we strongly support the transition to sustainable and renewable fuels, removing the organics recycling sector’s entitlement to use red diesel at this time would add an unacceptable and unaffordable financial burden on businesses which are already facing a perfect storm of worsening cost pressures,” said Jenny Grant, head of organics and natural capital at the REA.

“We have been in constant contact with our members who are warning about the impact this change would have on their business. Businesses are facing incredibly difficult decisions, with many saying they will have to make redundancies or even cease trading entirely.

“That is why we are urging the government or delay the proposed reform to red diesel policy for five years until 2027 to enable the development of viable alternative-fuelled vehicles and machinery.

“The government must postpone this change – jobs and businesses are on the line.”

Keenan Recycling, a UK food waste recycler, said the removal of red diesel entitlement will cost the company around £30,000 (€36,000) per year.

“If councils are unwilling to accept a rate rise under existing terms, we will have to consider letting staff go to manage this cost,” said Keenan Recycling’s managing director, Grant Keenan.

“We have investigated investing in electric machines, but the cost is prohibitive. We have also considered alternative fuels, such as hydrotreated vegetable oil, but this is more expensive than diesel. In short, there is no ‘green’ alternative at present.”

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