Red diesel was massively restricted last month as the Government looks to reduce greenhouse gas emissions in the transport sector. Despite this, many fear that businesses will struggle, especially given the new record diesel price, which has hit drivers pockets at 180.88p per litre.
Nawaz Haq, Executive Director of SulNOx Group Plc, said the record diesel prices, coupled with the red diesel rebate, will have devastating effects on businesses.
Speaking to Express.co.uk, he said: “This is exactly the sort of situation we feared would happen following the end of the rebate on red diesel.
“This latest price rise is very worrying for the large number of industries, such as construction, which rely on diesel.
“They are being hit with the biggest rise in fuel costs for years at the same time as other overheads are also increasing.”
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However, for many industries affected by the restrictions, this may not be immediately possible.
Mr Haq continued, saying: “The UK Government, in its policy statement on the red diesel taxation, says that higher fuel prices encourage the take up of greener and cleaner vehicles and push users to improve efficiency or to use less fuel.
“By the Government’s own admission, a fuel duty cut cannot be good for the environment and goes against the fabric of the Government’s Net Zero Strategy, which is currently being legally challenged by groups including Friends of the Earth and ClientEarth.
“It is clear to see that we are not at a stage where construction plant vehicles for example can be electrified – the technology either just isn’t there or is nowhere near being viable if it is.
It was estimated by many that the rebate of red diesel would lead to fuel costs increasing by 55 percent, threatening the survival of many businesses.
SulNOx estimated that this would net the Treasury around £500million.
Early estimates from Research Management Association Scotland found that operating costs because of the rebate would spike dramatically.
It forecast costs to rise by around 15 percent, with companies facing additional fuel expenses of between £100,000 and £400,000 per year.
Even before the restrictions were introduced at the beginning of April, many people who relied on red diesel reported seeing enormous price increases.
One farmer from the Midlands said they were asked to pay 112p per litre in mid-March.
In comparison, the same farmer said he paid 73p per litre for 10,000 litres just 10 days earlier, showing massive price hikes.
As a result of the red diesel changes, some fuel supplies have suspended quoting prices because they are rising so quickly between the point of order and delivery.