Schemes to help contractors adjust to red-diesel ban gain funding

A project helping Skanska to develop hydrogen-fuelled construction equipment has been awarded more than £400,000 through a government scheme to help the sector adapt to the red-diesel ban.

Technology firm ULEMCo Ltd, which is working alongside Skanska and the Buildings Research Establishment (BRE), was given £418,613 to develop and deploy a combustion engine for on-site construction equipment, which will allow piling machines to run on hydrogen fuel.

A total of 17 projects were awarded funding through the red-diesel replacement competition after the Department for Business, Energy & Industrial Strategy provided £6.7m during phase one. The scheme was brought in to help the construction sector and others adjust to life without the fuel after it was banned in April.

Other successful bids saw £357,000 given to a project involving Motive Fuels and BAM Nuttall, which is developing a “hydrogen refuelling station” to decarbonise BAM’s fleet and provide net-zero carbon fuel to construction sites in the east of England.

Bramble Energy’s Gen-ZE: fuel cell generator was awarded the most funding (£460,000), while tech company Punch Flybrid received the top grant amount for its flywheel energy storage system.

Worth £40m, the scheme aims to support the development and demonstration of low-carbon fuel and system alternatives to red diesel for the construction, and mining and quarrying sectors.

The competition is part of the £1bn Net Zero Innovation Portfolio (NZIP) and is being delivered in two stages. A total of £32.5m will be available in grant funding for phase two, which will open in early 2023, with up to £15m per project.

In contrast, projects were able to bid for a maximum of £460,000 during phase one. Projects can take part in both application rounds.

Through the scheme, the government aims to aid the decarbonisation of high-impact sectors, such as construction, which have been affected by the partial removal of the entitlement to use red diesel and rebated fuels since April.

What is red diesel?

Red diesel can currently be used by construction companies to power their plant machinery. It is cheaper than road fuel, thanks to a rebate of 46.81p per litre, which is taken off the full price of road fuel. The diesel is dyed red so that it cannot be used in a standard road vehicle, which would be illegal.

This arrangement changed on 1 April, after the government decided in the Budget 2020 to remove the ability of some sectors, including construction, to use red fuel. It can still be used by sectors such as rail, agriculture and forestry.

Earlier this year, contractors sounded the alarm of “crippling” red-diesel changes, with firms forced to pick between paying to upgrade machinery to more environmentally-friendly alternatives or using their current equipment with standard white diesel, which is more expensive.

Construction News recently published an article exploring which technologies and fuels contractors are turning to since the scrapping of red diesel in April.

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