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VIEWPOINT Editor LEE JONES
ljones@hamerville.co.uk Managing Editor
RED ALERT T
he recent COP26 conference has brought our collective responsibility to address climate change into sharp focus. The construction industry has a central role in ensuring the ambitions articulated by our legislators become a reality, of course, but it is equally clear that it Lee Jones, will need help from Whitehall Editor along the way. From next April, for example, the sector will no longer enjoy a rebate on red diesel. On the face of it, this is a move which is intended to promote environmentally friendlier alternatives, but could well achieve the opposite, or at best very marginal gains. If plant hirers and contractors no longer have access to a subsidised fuel it’s likely they will transition to the next cheapest option, and that is white diesel. The initial capital investment of battery-powered equipment is still too high, whilst residual values are yet to be clearly defined, which remains a crucial consideration for the rental sector. Moreover, that electric avenue is still not a navigable path at the heavier end of the plant spectrum, whilst any other solution, such as hydrogen, is a very long way down the road. According to a survey by the Civil Engineering Contractors Association, red diesel’s demise could amount to an added burden for SMEs of between £250,000 and £600,000 per year, a cost hike that could have serious implications for a company’s ability to continue trading. That comes at a time when supply issues are still unlikely to be satisfactorily resolved, with demand for equipment pushing up prices and limiting the available options in both the new and used markets. Moreover, once it becomes common knowledge amongst the criminal fraternity that construction plant is routinely using white diesel the fuel is likely to become a more attractive target for thieves. There are a number of alternatives fuels
now available and we discuss the relative merits of these on Page 8 of this issue, but these are always likely to represent transition technologies rather than long term alternatives – a wholesale stampede towards hydro-treated vegetable oil, for instance, could itself cause enviornmental harm. Having said that, given that it can be utilised without modification to the machines, and can at the same time accrue CO2 savings over conventional diesel, HVO is becoming an attractive proposition for construction sector companies looking to demonstrate their environmental credentials. The problem is that from April 2022 these potentially greener choices will equally be taxed at a full rate.
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The initial capital investment of batterypowered equipment is still too high, whilst residual values are yet to be clearly defined.
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The age of burning to produce energy is indubitably coming to an end but, if we are to avoid unnecessary economic harm in the interim, we can only achieve it within a practical and realistic timeframe. In the short term, in order to incentivise their use, that should include proper subsidies for lower carbon fuels. It is encouraging to see organisations implementing sustainability polices at every level of their business, whether it’s plant hirers offering the latest in zero emissions technologies, or contractors making genuine calculations on the carbon footprint of their projects. At a time of unprecedented cost pressures, however, politicians must recognise that the industry needs a favourable tax regime if it is to achieve these aims.
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Total Average Net Distribution 8.215 July 2020 – June 2021
CPN I NOVEMBER / DECEMBER 5
