Call for debate on red diesel rebate
17th August 2023
A new paper by a team of UK and Canadian researchers is calling for a debate on whether the fuel tax rebate on red diesel for commercial fishing vessels should be continued.
It says the rebate costs the UK government between £150m and £180m per year, and acknowledges that some of the most fuel-intensive UK fleet segments such as bottom trawling and dredging would be unprofitable if fuel tax concessions (FTCs) were removed.
The paper notes that fuel costs are a significant portion of the total expenditure for many commercial fishing vessels, in some cases dictating profitability.
In many nations, these costs are reduced by subsidies or rebates – but the researchers say: “There is evidence of growing support from various channels that public opinion is moving towards a reassessment of fuel subsidies.” Fuel subsidies globally ‘are estimated to have totalled $8bn in 2018, and represent more than a third of all harmful fisheries subsidies’.
The paper outlines the current value of FTCs for UK fishing vessels and potential policy considerations for reform.
It explains that FTCs for commercial fishing are provided through the ‘red diesel rebate (RDR)’ and ‘marine voyages – relief from fuel duty’ legislation, which mean the industry pays zero fuel duty.
From April 2022, access to the RDR was removed for some non-marine sectors, but no change is currently planned for commercial fishing.
The policy objective behind the 2022 change was to help the UK government meet its climate change and air quality targets, and to ensure that the tax system incentivises users of diesel and other polluting fuels to improve energy efficiency, invest in cleaner alternatives, or just use less fuel.
These justifications for changes to the RDR could also apply to the fishing industry, and the policy ‘is being revisited in other sectors’, say the researchers – but they add that in any future transition, ‘changes to FTCs must be fully informed, just and deployed in a phased manner’.
The study therefore ‘aims to explore for the first time the effects of FTCs on the costs and profits of fishing for the UK commercial fishing fleet’.
It highlights that revisiting FTCs for the UK industry could potentially ‘generate both economic and environmental benefits’. Their removal would ‘likely incentivise a transition towards less fuel-intensive fishing methods, thereby reducing greenhouse gas (GHG) emissions’ and reducing the impact of fishing on the marine environment.
Recognising that the UK industry is in competition with other countries’ industries, it says the challenge will be to ensure that it can compete economically and is supported to reduce its emissions and ecological footprint.
The researchers argue that continuation of FTCs can be counterproductive in the long run as it delays adjustment and masks structural problems. But if the FTC for the fishing sector is modified, the composition of the future UK fishing fleet is unclear, so it is important to begin discussions and preparations in advance.
The authors hope their paper ‘will generate debate about how support could be provided to the fishing sector to ensure that it is truly sustainable when viewed from economic, social and environmental perspectives’.
This is especially relevant in light of growing pressure from NGOs and other sources to revisit fossil fuel reliefs and meet the target of net zero by 2050 – and a 78% reduction by 2030 compared to 1990 levels – and reduce the release of blue carbon from seabed disturbance by reducing demersal gear impacts.
“If appropriately modified, FTCs could help achieve Good Environmental Status, the sustainability and climate change objectives in the Fisheries Act 2020, and would globally be in support of the United Nations Sustainable Development Goal 14,” say the researchers.
Mike Park, chief executive of the Scottish White Fish Producers’ Association (SWFPA), whose membership includes many large demersal trawlers and scallop dredgers, said the government had specifically not removed the fuel duty rebate for the fishing and other marine industries in 2022 when it ended the rebate for many other sectors.
He said ending the tax rebate for the fishing industry would have ‘a significant impact’ on the fleet and the SWFPA would ‘strongly resist’ its removal if it became government policy.
“At the end of the day we are providing food security to the country the same as the farmers, and there would be no reason to treat us differently from other food producers,” he told Fishing News.
“We don’t necessarily see it as a fuel subsidy, we see it as a government approach to ensuring that along with other food producers the fleet continues to bring food to our tables.”
The paper, ‘Revisiting fuel tax concessions (FTCs): The economic implications of fuel subsidies for the commercial fishing fleet of the United Kingdom’ is published in Marine Policy and can be read here.
This story was taken from the latest issue of Fishing News. For more up-to-date and in-depth reports on the UK and Irish commercial fishing sector, subscribe to Fishing News here or buy the latest single issue for just £3.50 here.
Sign up to Fishing News’ FREE e-newsletter here.
