It probably escaped most people, but there was an underlying increase in the cost of petrol, diesel and Gasoil on 15th April. This is because the UK Government-mandated proportion of bio-fuel to be mixed with mineral fuel increased from 4.75% to 7.25%. Bio-fuel costs more and achieves higher prices on the wholesale markets, therefore increasing the proportion, and leading to a price increase.

The enabling legislation for this was approved by the House of Lords on 6th March, without any opposition. The same enabling regulations also made provision to increase the proportions to 8.55% on 1st January 2019 and 9.755% the following year. This is generally perceived as being a “good” thing because there is less carbon impact from bio-fuel than mineral fuel. Perversely, given the current perception that diesel is a “bad” fuel due to the NOx emissions produced, bio-fuels have been shown to emit up to 30% more NOx than mineral diesel.

It perhaps illustrates how confused government policy has become. The same legislation includes provision for additional charges in 2019 for the Advanced (Development) Fuel mandate and the Greenhouse Gas (GHG) obligation to be incorporated in liquid fuel costs. The latter could potentially be used as a framework to monitor actual levels of electricity used to provide transport fuel, whether during production or at the point of vehicle charging, and therefore as the basis for a new taxation regime.

In the near term, apart from absorbing the additional direct costs, users may have to modify fuel storage and supply systems to adjust for the higher bio content. Bio-fuel is more likely to increase the possibility of mould growth in storage tanks, so a more rigorous housekeeping approach may be needed. Additionally, bio-fuel has been observed to be more aggressive to seals, etc. in fuel lines, so regularly checking for leaks will be essential.

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Article by: Duncan Rogers