Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of including water and power companies and other utility providers in the list of organisations entitled to use red diesel and rebated biofuels.

Following consultation in 2020, the Chancellor confirmed at Spring Budget 2021 that the Government will remove the entitlement to use red diesel from most sectors from April 2022. This will more fairly reflect the negative environmental impact of the emissions they produce and help to ensure that the tax system incentivises the development and adoption of greener alternatives.

The Government did not believe that the cases made by sectors that will not retain their red diesel entitlement outweighed its environmental objectives.

Regarding certain utility providers, the Government will be amending the qualifying fuel definition accordingly to ensure that businesses currently using red diesel to generate electricity for supply through a licensed supplier can continue to reclaim the fuel duty, less any carbon price support payment due, once they have to use fully duty-paid diesel from 1 April 2022.