Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether his Department has made an assessment of the potential merits of reducing fuel duty on hydrotreated vegetable oil fuel.

Hydrotreated vegetable oil (HVO) is treated as diesel for the purposes of fuel duty. HVO benefits from the rebated duty rate of 10.18 pence per litre (ppl) when used for an allowed purpose, and 52.95 ppl for road use.

The Government encourages the use of HVO through the Renewable Transport Fuel Obligation (RTFO), which incentivises the use of low carbon fuels and reduces emissions from fuel supplied for use in transport and non-road mobile machinery. The RTFO has been highly successful in supporting a market for renewable fuel since its introduction in 2008. Renewable fuels supplied under the RTFO currently contribute a third of the savings required for the UK’s transport carbon budget.

The Government’s Biomass Strategy which was published on 10 August reviews the amount of sustainable biomass available to the UK, including liquid biofuels such as HVO. It is important to ensure that biomass is prioritised within the economy where it offers the greatest opportunity to reduce greenhouse gas emissions in ‘hard to abate’ sectors where there are fewer options to decarbonise through alternative low carbon technologies.

As with all taxes, the Government keeps the tax treatment of HVO under review.