Oireachtas Joint and Select Committees

Tuesday, 28 June 2022

Joint Oireachtas Committee on Climate Action

Sectoral Emissions Ceilings: Discussion

Ms Andrea Lennon:

I thank the Deputy for the question. HVO is a drop-in fuel and it can be blended at rates higher than standard biodiesel, so it is very attractive in terms of road haulage or other vehicle users. It is more expensive than diesel - as a rule of thumb, is about three times the price of diesel - and there is a lot of global demand for it because it is part of the biofuels strategy globally to decarbonise transport. As we increase the biofuel obligation rate, there is an understanding that HVO will be the heavy lifter within that.

We have had many discussions with the road haulage sector around this and other ideas. The Deputy is right that those in the sector are really looking at their area to see where they can reduce costs and decarbonise. On that, HVO does not attract carbon tax, so that is a positive, but what we have been looking at is the potential for a differentiated taxation treatment of biofuels, and that would include HVO for the purposes of excise, that is, the non-carbon tax part of the mineral oil tax. There is a bit of a way to go on that. We are getting a study done on it by Ernst & Young and the context for that is the EU taxation directive which looks at differentiating future taxation for biofuels based on their energy content. We are going to look at that area to see if there is something in it that could be beneficial to the hauliers - what they call a green rebate. It would be a replacement for the diesel rebate scheme, given it is acknowledged that in the future there will be fewer supports for fossil fuels, and that would include the diesel rebate scheme. We need to look at other options and it is certainly something that is on our agenda. As I said, however, there is a bit of work to be done on that yet.