To ask the Chancellor of the Exchequer, whether he has made an assessment of the potential merits of introducing a zero-rate tax for renewable hydrotreated vegetable oil for domestic heating.
Answered on
19 September 2023
Hydrotreated vegetable oil (HVO) is a relatively new fuel, and has limited availability in the UK. When used for domestic heating, HVO benefits from the rebated duty rate of 10.18p per litre, in contrast to the full duty rate of 52.95p per litre.
The Government’s Biomass Strategy, which was published on 10 August, reviews the amount of sustainable biomass available to the UK, including liquid biofuels such as HVO. It is important to ensure that biomass is prioritised within the economy where it offers the greatest opportunity to reduce greenhouse gas emissions in ‘hard to abate’ sectors where there are fewer options to decarbonise through alternative low carbon technologies. Biomass has a role in decarbonising certain properties, such as off gas grid homes that are not readily suitable for heat pumps. Further evidence is needed to consider what role biofuels could play.
As with all taxes, the Government keeps the taxation of HVO under review, and any changes are announced by the Chancellor at fiscal events.