If there’s one thing worse the searching in vain for a miracle cure, it must be finding your miracle cure only to discover that it makes the illness worse.
That is how many people in the construction and haulage industries might now be feeling about HVO – hydro-treated vegetable oil – the natural, biodegradable, low-carbon alternative to planet-killing diesel fuel.
Because just as fleet operators flock to make the transition from fossil diesel to low-carbon HVO, two highly-influential organisations – the Environment Agency and Balfour Beatty (the UK’s biggest contractor, no less) have slammed on the brakes and called time on HVO.
In May this year, Balfour Beatty published a position paper setting out its reservations concerning the HVO supply chain and questioning the fuel’s sustainability. Fuel suppliers were told not to deliver HVO to Balfour Beatty sites and to refuse any requests from Balfour Beatty site managers for HVO fuel.
“Balfour Beatty does not directly purchase HVO fuel for our sites and will expect our supply chain to support our policy position when working for Balfour Beatty,” the company said.
It added: “We are working with our supply chain partners to keep HVO use when operating plant and fleet on our sites to an absolute minimum. For example whilst some plant may arrive from other sites with tanks part full of HVO, once used up, we expect them not to refill their plant with HVO whilst on a Balfour Beatty site.”
This is at odds with the prevailing orthodoxy. For at least the past two years, HVO has been hailed as the perfect planet-friendly alternative to diesel.
Made primarily from used cooking oils (UCO), HVO sounds like a genuine environmental win-win. Instead of accumulating to form massive ‘fatbergs’ in our urban sewers, waste UCO can be collected from your local chippie or takeaway and transformed into organic, planet-friendly fuels for our cars, trucks and diggers.
HVO is sold as 90% carbon-neutral and producers say that it reduces nitrogen oxide emissions by up to 30% and particulates by up to 85%. It is also biodegradable.
The rate of growth in popularity of HVO became very apparent this time last year when The Construction Index conducted a survey of UK plant-hirers to find out how they planned to adjust to the imminent withdrawal of subsidised red diesel. For decades, relatively low-cost red diesel was literally the life-blood of every plant fleet.
While many respondents were just gritting their teeth and preparing to switch to fully-taxed white diesel, a remarkably high proportion were already weaning themselves off the red stuff and had either switched entirely to HVO or were in the process of doing so. This seemed very surprising, since HVO is even more expensive than white fossil diesel and is taxed at the same rate.
In the 12 months since our survey there has been a steady stream of announcements from plant hirers and contractors announcing their conversion to HVO. These have included tier-one contractors such as Bam, Kier, Skanska, Amey and Sir Robert McAlpine, and leading plant-hirers including Speedy, Cadman Cranes, Aggreko, GAP Hire and Ainscough Crane Hire.
In August 2021 the National Federation of Demolition Contractors directed its 140 members to switch to HVO or an alternative low-carbon solution.
What had been seen not so long ago as a slightly wacky alternative fuel has become a business big enough to prompt BP to invest millions in a 30% stake in Green Biofuels (GBF), the UK’s biggest supplier of hydrotreated vegetable oil.
So why have Balfour Beatty and the Environment Agency bucked the trend and called a halt on this new wonder-fuel?
According to Jo Gilroy, Balfour Beatty’s group sustainability director, it is simply a matter of due diligence. “We’re very good at jumping on solutions and thinking they’re the answer to our problems, aren’t we?” she says. “We look for easy wins, and HVO looked like that.
“But any one-hit wonder solution needs to be examined carefully; you always have to do your due diligence.”
As momentum built in favour of HVO, Balfour Beatty decided it had to delve deeper into the sustainability claims being made for the fuel before approving its use. And what it has found so far has only raised doubts.
The chemistry of HVO is well understood but less clear is the sustainability of its supply chain. “What does the supply chain look like?” demands Gilroy, “Nobody knows - it’s very complex and there’s very little transparency.”
One of the big attractions of HVO is that it purports to transform a troublesome waste material into a valuable commodity. But Gilroy says this is misleading: “UCO has always been used in the production of animal feed – it’s not a waste product,” she says.
This might appear to be a mere technicality, but if one industry’s feedstock is diverted to supply another industry’s needs, alternative sources must be found. If producers of animal feed cannot obtain enough raw material in the form of UCO, they will turn to primary sources, namely commercially-grown vegetable oils such as palm oil.
Mention palm oil and you open a whole new environmental can of worms. Palm oil accounts for about a third of all vegetable-derived oils currently used in food production and the manufacture of cosmetics – and it’s used as a biofuel, too. Its chemical stability makes it ideal for use in factory-processed foods; you’re likely to see it listed among the ingredients in most baked goods, confectionary and other foodstuffs. It has been estimated that world’s human population consumes almost 8kg of the stuff per person every year.
Oil palms only grow in tropical climates and the burgeoning worldwide demand has led to widespread deforestation in many parts of south-east Asia, Africa and South America. The rate of deforestation is so well-documented that palm oil has in recent years become a byword for environmental destruction, second only to the oil and gas industry.
“There is a high risk that the resulting increase in demand for used cooking oil is causing deforestation and the draining of peatland and marshland in countries such as Malaysia and Indonesia where farmers are having to grow palm oil to produce animal feedstock,” says Balfour Beatty’s position paper.
Deforestation was a major environmental concern long before Greta Thunberg started skipping school and governments declared a ‘climate emergency’. The forest products industries responded to public alarm by cleaning up their supply chains and offering evidence that they were not responsible for deforestation.
Organisations like the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forestry Certification (PEFC) were set up in the 1990s to provide third-party certification of a wood- or paper-based product’s sustainable origins via a ‘chain of custody’ record.
FSC and PEFC certification means that we can consume forest products knowing that they are from sustainable sources. So why not apply the same principle to HVO?
The question is rhetorical – there are indeed schemes in place to verify the provenance and sustainability of biofuels, including HVO. Foremost among these is the International Sustainability and Carbon Certification scheme (ISCC) which describes itself as a “sustainability certification system covering the entire supply chain and all kinds of biobased feedstocks and renewables.”
Most UK suppliers of HVO are certified to ISCC standards. They have to be able to back up their claims of sustainability, not least because the UK’s Renewable Transport Fuel Obligation (RTFO), introduced in 2008, places an obligation on suppliers of transport fuels to demonstrate that a proportion of their fuel comes from renewable sources.
Crown Oil, one the UK’s leading suppliers of HVO, says that all of its HVO is UCO-based and is therefore genuinely renewable. According to the company’s technical sales manager, Simon Lawford, all UCO suppliers must be registered with an independent auditor such as the ISCC. “That auditor must audit, yearly, the supply chain and each [fuel] tank,” says Lawford.
“UCO transported for the manufacture of renewable fuel in Europe and the UK must be accompanied with a ‘proof of sustainability’ (POS) document.
“As a receiver of fuel, Crown Oil must first have the POS for the fuel imported approved by the Department for Transport. All sales must be verified independently and the results of the verification confirmed to the DfT,” adds Lawford.
Crown Oil is a member of the Renewable Fuels Assurance scheme set up and run by an independent body, the Zemo Partnership. “This means that we must declare sales of our fuel, its feedstock credentials and carbon loading to both our customers and Zemo, quarterly. We are then independently verified on an annual basis,” explains Lawford.
As the UK’s biggest supplier of HVO and also ISCC-certified, Green Biofuels (GBF) is keen to reassure both the market and public sector clients of the green credentials of its HVO. “There aren’t any virgin crops or feedstocks [in GBF fuel] associated with land use change,” the company says.
“Under the RTFO and managed for the DfT [Department for Transport], the eligibility and sustainability are monitored and policed. All sales to customers are accompanied by Zemo certification, as GBF is an approved renewable fuel supplier, a scheme which Zemo operates on behalf of the Department of Transport.
“We were adopters of the Renewable Fuels Assurance Scheme to enable a full chain of custody of our fuels from feedstock to end user,” the company says.
Green Biofuels does not claim that HVO is a panacea, but it argues that whatever its shortcomings it’s better than burning fossil fuels: “HVO is not the ultimate solution but a key transitional technology that enables the industry to make positive steps while appropriate energy pathways develop without risk or capital expenditure”.
It also says that the Environment Agency had been badly advised on the issue: “Its decision indicates an outdated approach to the energy transition and draws conclusions from incomplete research and several misconceptions regarding the renewable credentials of biofuels. It made no reference to the advanced fuels industry and the decision is in direct contrast to the position of the UK government.”
This highlights a conundrum – because while the Environment Agency has banned the use of HVO on its sites since September, the Department for Transport and Defra (the EA’s own sponsoring department) both continue to favour the fuel, albeit with caveats.
A report on HVO published by Defra Group Fleet Services in 2020 appears to endorse the use of HVO. The Environment Agency, through Defra Group Fleet Services, operates a 5,000-vehicle fleet, including 1,500 vans and 3,500 company cars. It is naturally keen to explore new ways in which it can contribute to its stated aim to be net-zero by 2030.
The 11-page document acknowledges that while electric vehicles are available, the Agency first needs “to look at how to operate our existing assets more efficiently”.
It adds: “Hydrotreated vegetable oil (HVO) is a renewable diesel that offers a number of benefits when compared to previous methanol treated bio-fuels and fossil fuel diesel.” The report generally approves of HVO as a transitionary fuel – that is, preferable to traditional fossil diesel in existing vehicles until a better permanent solution can be found.
“The repurposing of a finite waste product does raise unavoidable issues around security of supply for this fuel,” says the report. “Increased popularity will make the product in its most sustainable form (100% repurposed waste material) increasingly difficult to obtain and would potentially see more of the product utilising virgin crops, such as palm oil, as a feedstock. The EA may wish to seek assurance from suppliers regarding limits on the use of virgin feedstock.”
In response to a request for clarification, a Defra spokesman provided the following statement: “As part of our push to ensure we operate in the most sustainable way possible we have been looking at the use of HVO fuel in our operations. We consulted with a range of people including industry groups and our supply chain.
“We are considering what our position will be having reviewed information from several sources. We will notify our supply chain of the position we want to take together when we have concluded our assessment.”
Meanwhile Balfour Beatty remains adamant that HVO will not be permitted on its sites – at least, not until its sustainability can be proven. This is despite a trial carried out last year by the Balfour Beatty Vinci joint venture, in partnership with Imperial College London, as part of HS2’s innovation programme. That exercise concluded that HVO is acceptable where the provenance of the ingredients is assured.
But Jo Gilroy says the jury is still out. And she worries that too much reliance on what she sees quick-hit solutions like HVO distracts from more meaningful measures for reaching net zero.
“We’re not saying we’d never use HVO under any circumstances, but we have to look for real solutions such as finding efficiency savings,” she says. “And unfortunately, improving efficiency isn’t sexy or exciting.”
To illustrate her point, she cites the three categories, or ‘scopes’, of a business’s greenhouse gas emissions used by the most widely-used international accounting tool, the Greenhouse Gas Protocol.
Scope 1 relates to direct emissions from owned or controlled sources. In the context of HVO, this means a company’s fleet of vehicles or plant.
Scope 2 covers a business’s indirect emissions from the generation of bought-in power or energy, such as electricity or heat.
And Scope 3 includes all other indirect emissions emanating from a company’s value chain.
“So Scope 1 and 2 relate to your direct use of fuel and energy,” says Gilroy. “But that accounts for only 10 – 15% of your entire CO2 footprint. “The rest is all Scope 3. it’s the dumping-ground for all your other carbon sources, and it dwarfs the other two. So when you say that using HVO reduces your CO2 by 90%, that can only apply to your Scope 1 and 2 emissions,” she declares.
Balfour Beatty and the Environment Agency adopted their zero-tolerance approach to HVO almost simultaneously but quite independently, says Gilroy. But while Balfour Beatty has gone out on a limb, it is not alone. Another tier-1 contractor, Volkerwessels UK has also banned HVO from its sites:
“VolkerWessels UK have not approved the use of HVO as we are concerned about feedstock provenance, in particular with regard to palm oil. We will supply only if expressly requested by the client on a given project,” said Volkerwessels’ group procurement director Graham Davey in a statement for The Construction Index.
“The Volker Group is concentrating its effort to reduce energy consumption and thus carbon, through the most efficient site accommodation, the latest technology in plant and on-site power generation driven by real-time data from enabled systems.
“From a wider perspective we now have a number of data-driven solutions that are driving more efficient site working practices. In addition, working with our clients, designers and supply chain we look to the latest innovative design that further reduces our carbon footprint,” says Davey.
For anybody tasked with reducing their company’s carbon footprint or – more daunting still – hitting an ambitious net-zero target within the decade, the challenge is looming ever larger.
What at first appears to offer a tool with which to tackle climate change might not be all that it seems. The truth is that your path towards net zero is more likely to lead you into a maze than it is to take you straight from A to B.