There is something fundamentally wrong when we ask farmers to reduce emissions but then tax them more heavily for choosing a cleaner fuel. Hydrotreated vegetable oil, HVO, is a low-carbon biofuel. It is made from waste and byproducts from the food industry and it is not intended for human consumption. It works in existing diesel engines and can reduce greenhouse gas emissions by up to 90%.

I spoke about EnergyCloud yesterday. It is incredibly frustrating when you have a really good, well-thought out project that has proved itself and then this issue arises. We are on track to miss our climate targets to 2030. In that context, the taxpayer will be picking up a bill of €28 billion in fees. We have a practical, ready-to-use solution for the agriculture sector, but there are no incentives to encourage farmers to use it. HVO is subject to a VAT rate of 23%, while agri-diesel or low-sulphur gas oil attract a rate of 13.5%. The higher rate is punitive and does nothing to incentivise farmers to use HVO. In fact, it actively pushes farmers back towards fossil fuels. When HVO is used off-road in agricultural machinery, the road transport fuel obligation scheme applies in an 80:20 rule, leaving a price gap of over 20 cent more per litre on the marked gas oil. In addition, HVO is already about 8 cent per litre more expensive to produce and hauliers supplying the agricultural sector cannot access the 7 cent diesel rebate scheme credit. If the Government wants to meet climate targets and avoid massive fines, it should be trying to implement practical measures. Cutting the VAT rate on HVO would be an easy way to support farmers who would make the switch if it was more viable financially to do so.