Confusion on the way for Gasoil users !

Confusion on the way for Gasoil users

What’s the issue ?

EU Directive 2009/30/EC introduces a requirement that, from 1^st January 2011, all gas oil (commonly known in the UK as ‘red diesel’) marketed for use in non-road mobile machinery (NRMM) must contain no more than 10 milligrams of sulphur per kilogram of fuel (virtually ‘sulphur free’). NRMM includes tractors, other agricultural equipment, forestry equipment, construction equipment, forklifts, portable generators, railway engines, and inland waterway vessels. In the case of gas oil for use in rail vehicles the introduction of sulphur free gas oil will be one year later (1^st January 2012).

Why will this cause confusion?

The new specification applies to NRMM, and not other Gasoil uses such as heating boiler-fuel, static plant, etc. Therefore companies who currently use the existing specification Gasoil will have to decide on how to order their fuel after 1^st January. Their consideration will need to take into account what the intentions are of their incumbent suppliers. Some suppliers have already stated that in order to meet the NRMM requirement, they will supply Road-specification diesel (which already meets the requirement) as Gasoil, after adding red dye in order for it to have Gasoil duty rates applied. Moreover, some have also indicated that they will discontinue supply of non-NRMM.

However, Road-specification diesel has by law to include a proportion of bio-diesel (min 3.5%, and up to 7%) This has a serious impact both for the storage of the product, and potentially its use in older equipment and associated maintenance regimes. We have also had anecdotal evidence of firing problems when bio-diesel or bio-gasoil has been used in older boilers.

“Bio” fuels present particular problems for storage and fuel-lines and filters, because of a tendency for algae growth. They are also reportedly more aggressive in degrading seals, gaskets, etc.

What are the effects on my fuel pricing?

On the international markets, Road-specification diesel is currently about 1 pence per litre more expensive than Gasoil (before duty is applied). We can therefore assume that NRMM Gasoil will be at least 1 pence per litre more than current supply, irrespective of any commodity market price variations. Users will also need to budget for increased costs of service and maintenance.

What should we be doing now?

Users of older equipment would be well advised to test whether it can operate successfully with a bio-blend. If not, a plan needs to be in place to ensure that supply of the older specification Gasoil will be available from either their current supplier or alternatives.

Where maintenance is undertaken in-house, consideration needs to be given to reviewing service and inspection intervals, and additional maintenance action that may be needed to discourage, and if necessary, flush algae development in fuel tanks, lines and filters.

Mixed application users (ie a combination of mobile plant, static plant, and/or heating boilers), may wish to give consideration to having two sets of storage equipment for the different uses, especially if they have older equipment with reasonable economic life left.

Where equipment is in use, which is found to be unsuitable for a bio blend, processes need to be in place to ensure that all staff who order fuel understand the differences in Gasoil, and which specification needs to be delivered.

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