The competition responds to government analysis that private investment into diesel replacements is unlikely to happen at the pace needed to achieve net zero by 2050.
In the March 2020 budget, chancellor Rishi Sunak announced the removal of construction’s entitlement to use lower-taxed red diesel and rebated biofuels from April 2022. The rationale was to encourage industry to decarbonise – although biofuels that release a fraction of the carbon emissions of regular petroleum diesel are also to lose their tax rebate.
The Department for Business, Energy & Industrial Strategy (BEIS) is launching a Red Diesel Replacement competition, with the hope of promoting alternative fuels, which are likely to include hydrogen fuel cells and lithium ion batteries, as well as e-methanol, e-methane and ammonia.
The Red Diesel Replacement competition forms part of BEIS’ £1bn Net Zero Innovation Portfolio.
Phase 1
A total of £9.2m in grant funding is available for phase one, with up to £460,000 going to projects that develop technologies within any of the three innovation lots at technology readiness level four (TRL4) and above:
- Lot 1: Distribution, storage and refuelling systems development
- Lot 2: Development of vehicle (components/sub-systems) and fleet management infrastructure (facilities for maintaining, hosting and servicing vehicles)
- Lot 3: Fuel development
It is envisaged that the separate technologies will be presented at a matchmaking workshop mid-way through this phase to allow consortia to form for Phase 2.
Phase 2
A total of £30m is available for phase two, including up to £15 million for projects at TRL 5-6 that demonstrate a low carbon integrated system that includes elements of all three technology lots from Phase 1 on a construction and mining/quarrying site. Projects must demonstrate that the technology is at TRL 7 upon completion.
To be eligible for this competition, the technologies must prove that after renewable transport fuel obligation (RTFO) support, it can achieve a total cost of ownership (capital and operational costs) that is at least as good as current fuel/vehicle systems after the removal of the red diesel rebate.
Phase 1 of the competition opens on 27th September 2021 with the publication of guidance documents. Two virtual engagement events are proposed to be held on 8th and 9th September 2021 to provide applicants from the construction sector, and the mining/quarrying sector, respectively, with the opportunity to understand more about the competition.
To secure a place at the stakeholder engagement events or to register your interest in applying for the competition, complete the Red Diesel Replacement competition expression of interest (EOI) form. The deadline to sign up for the stakeholder engagement events is 12 noon on 7th September 2021. The deadline to register interest in applying for the competition is 12 noon on 24th September 2021.
For more details, email RDR@beis.gov.uk.
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