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Blog January 2022

How Waste and Recycling companies can mitigate the extra cost of the red diesel ban with Route Optimization

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Conor Dowd Product Marketing Manager

How Waste and Recycling companies can mitigate the extra cost of the red diesel ban with Route Optimisation

From 1 April 2022, waste management companies in the UK will no longer be allowed to use red diesel in their vehicles, meaning rising fuel costs.

In its March 2020 Budget, the UK Treasury announced that only the agriculture, horticulture, fish farming and forestry sectors could use the red-dyed diesel that does not attract the same higher fuel duty. 

Previously, recycling and waste management companies had been able to use this cheaper diesel in their vehicles. But Chancellor of the Exchequer Rishi Sunak announced in the Budget that regular white diesel or biofuel would need to be used instead. Both are subject to the full fuel duty paid to the Government when you fill a vehicle.

The reason for this was to encourage the use of more sustainable vehicles or fuels, but the reality is that it also means more money for the UK Treasury.

Cost to recycling and waste management

The tax paid to the UK Government on each litre of white diesel is 57.95p per litre, while red diesel is entitled to a rebate of 48.81p per litre, giving it an effective duty rate of 11.14p per litre. 

At the time of the announcement, the Environmental Services Association executive director Jacob Hayler said: “The rise in duty on red diesel is a blow for the recycling and waste management sector, which relies on diesel fuels to keep recycling and waste processing facilities running efficiently. 

“Our sector is as important to society as agriculture, rail and fishing, so do not include the sector in the retained relief is a clear oversight by Government and a snub to an industry that, since the early 1990s, has reduced its carbon emissions by over seventy per cent. 

“At the moment, there is no viable low or zero-carbon alternative to much of the specialist machinery used by our sector, so these new taxes represent nothing but a penalty to industry and will inevitably increase service costs to tax-payers and businesses.”

Additionally, the Association for Renewable Energy and Clean Technology said that its members estimated that a switch to white diesel is likely to cost its waste members between £1.20 and £2.70 per tonne extra in operational costs – in many cases, this represents their current profit margin.

To add to the misery, the average price of diesel, according to the RAC, has risen from £1.20 per litre in March 2020 to £1.50 per litre in January 2022.

How can you mitigate the rising cost of fuel for recycling and waste management companies?

If you are not optimising your vehicle routes, then you are wasting fuel.

In the AMCS Platform, your routes are automatically calculated by our best-in-class Intelligent Optimisation software to ensure your vehicles take the most efficient routes. 

Typical benefits achieved by our customers from using this are:

Our agile and responsive solution allows your company to adjust in real-time while still optimising the route. For example, if a company needs an emergency collection, that can be incorporated into a collection schedule as efficiently as possible. 

Additionally, using telematics and the AMCS Platform enables recycling and waste management companies to monitor driver styles and use coaching to encourage efficient acceleration, braking and reduce the time the engine is idling.

With the cost of fuel already soaring, and a big jump in fuel duty set to hit recycling and waste management companies in April now is the perfect time to investigate ways to reduce or even eliminate that impact on your business through efficiency savings.

AMCS is ideally placed to help you with this due to more than 30 years of experience in understanding recycling and waste management companies and what drives their profit margin.

By using the AMCS Platform, not only can we make your fuel use more efficient, but we can also make your business processes work more effectively too. This means automating manual processes that save your staff time, enabling them to focus on more profitable activities. 

The AMCS Platform makes your company operate smarter, more seamlessly and digitally. 

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