The government has announced that the differential between fuel duty on diesel and alternative fuels has been extended to 2032, providing a major boost to an already surging natural gas industry.

The Budget, released this week, announced the government ‘will maintain the difference between alternative and main road fuel duty rates until 2032 to support the decarbonisation of the UK transport sector’.

What does it mean in practice?

This means that duty paid on fuels such as biomethane and natural gas will remain over 50% lower than diesel for the next fourteen years. Government support for viable alternative fuel options for fleets is vital in underpinning the transition from diesel and this differential provides certainty for fleet operators considering alternative fuels and underpins the business case for doing so.

Price stability through a strong commitment from government enables decisions for the longer term to be made by both fleet operators and natural gas infrastructure providers. The commitment provided this week shows support for what is likely to be three phases of fleet renewal for operators.

The commitment is significant in supporting the government’s Road to Zero strategy aim to reduce HGV greenhouse gas emissions by 15% by 2025, natural gas delivers this saving and is the only commercially viable alternative fuel to do so.

Stricter policies

The move by the government reflects a tightening of policy on the use of diesel. Thus far, the government has begun to roll out Clean Air Zones across the UK, with five set to be operational by 2020,  and has imposed further emission zones and charges, such as the T-Charge, which targets high-polluting diesel vehicles in central London.

What’s good about gas?

Natural gas is an emerging technology in the LGV/HGV sector and has seen rapid growth with the release of gas vehicles from major manufacturers such as Volvo, Scania and Iveco over the past year. Household names such as Ocado, Waitrose, UPS and Sainsbury’s have been quick in adopting the technology.  Recently John Lewis and Waitrose pledged to end their purchasing of diesel trucks in a bid to make their fleet diesel-free by 2030.

Fuels such as biomethane and natural gas achieve carbon reductions against diesel varying from 15-90% lower emissions. The upper end of that scale can be achieved by using biomethane, a waste-derived gas. The fuels also have a lower air quality footprint, achieving 99% lower particulate emissions and around 70% lower nitrogen oxides emissions.