Red diesel is making a comeback, as promised in the government's manifesto. BBB was proud to have secured a diesel discount for farmers, horticulturalists, and contractors in 2027. Research agency Ecorys conducted research on this matter at the government's request and has now concluded that most options are difficult to implement and susceptible to fraud. Moreover, it remains to be seen whether the diesel discount will hold up legally; in Brussels, due to state aid, but also due to increased nitrogen emissions.
The cabinet commissioned Ecorys to investigate the possible options regarding red diesel: the reintroduction of red diesel, an excise duty refund scheme, and a subsidy program. The report states that both the reintroduction of red diesel and an excise duty refund score poorly as options. According to the researchers, the risk of fraud is greater than before, because new vehicles have anti-sampling protection, making inspections difficult to virtually impossible. Furthermore, it is problematic that the proposal only applies to agriculture (where, prior to 2013, several target groups were allowed to use red diesel). "Introducing physical red diesel is very complex and impractical for contractors, as they would not be allowed to use the same red diesel vehicles for work outside of agriculture. This would require doubling their fleet," the researchers state.
Excise duty refund: abuse cannot be controlled
Another option, an excise duty refund scheme for diesel, fares just as poorly in the report: "Farmers can reclaim excise duty at least once a quarter. This would lead to at least 200.000 applications per year, and customs cannot process such a volume." Furthermore, the report states that abuse is impossible to control.
According to the researchers, a subsidy scheme based on a flat-rate system—not focused on exact usage, but on an average for a specific crop and area—is more feasible for fossil diesel. The necessary data are already included in the combined submission. However, this is less suitable for the sustainable diesel alternative HVO100 (hydrotreated vegetable oil), because it is impossible to verify whether this (more expensive) fuel has been used. A subsidy scheme or vouchers/fuel cards based on actual usage are reasonably feasible, but also susceptible to fraud, the researchers conclude. The recommendation is therefore to opt for the subsidy scheme based on a flat-rate system, i.e., with fixed payments.
2027 difficult to achieve
For all three options, it is uncertain whether Brussels will consider them state aid. The researchers recommend that the government consult with the European Commission on this matter. Furthermore, the researchers indicate that offering a discount on diesel fuel will lead to increased consumption (2% for a 10% discount, excluding any fraud). Besides increasing CO2 emissions by 3,3%, this also increases nitrogen emissions. The report recommends assessing in advance whether this subsidy can be maintained in light of the Council of State's case law on nitrogen. The researchers note that offering a discount on HVO100 actually reduces nitrogen emissions. "This creates nitrogen leeway for agricultural permits." Finally, the report argues that implementation in 2027 will be difficult due to the time required for procedures in Brussels.