The True Cost of HVO Fuel: Should You Switch?
As new environmental laws become more prevalent to combat the looming issues of climate change, Hydrotreated Vegetable Oil (or HVO) has become a talking point in the UK as more and more people are realising its wide-ranging benefits. An increasing number of industries, including construction, data centres, marine and rail have switched to HVO already, and we are proud to have moved our entire delivery fleet over to the renewable diesel.
HVO has been in use for well over a decade across Europe and is available at the pump in several Scandinavian countries. However, it only holds a minority share of the UK market, primarily because it takes time for users to realise the benefits of any new product, and secondly, because of misconceptions regarding its cost.
HVO has many operational and environmental benefits for diesel-powered equipment and engines. However, likening HVO to diesel in terms of cost isn’t a realistic comparison. The true unit cost of HVO is higher than regular diesel, at around 10-15% more, which is understandably the debating point when considering a new fuel, and rightly so with many fuel users facing a 46ppl increase in April 2022.
But when considering diesel’s limited future; it’s being phased out of regular usage as the world moves from fossil fuels to sustainable alternatives, the real evaluation you need to make is HVO versus electrification.
But first thing’s first, it’s important to understand what this fuel is.
What is HVO?
HVO is an advanced renewable diesel that is a direct drop-in alternative to mineral diesel. It’s made from certified 100% waste vegetable oils and animal fats and offers up to a 90% reduction in net CO2 emissions.
HVO cost benefits
No upfront investment or modifications needed
For those who have invested in expensive equipment such as diesel generators to produce power, it wouldn’t make financial or sustainable sense to get rid of them partway through their operational lifespan. Using HVO allows businesses to continue using existing infrastructure but in a sustainable way.
Fleet owners are also under huge pressure to reduce their environmental impact. While electrification is the favoured route currently being explored, most electric vehicles (EVs) are more expensive to buy, and in nearly all cases, more expensive to insure and maintain.
That’s not to mention the lack of accessible infrastructure currently available and the inconvenience of having to charge vehicles recurrently throughout long journeys, something which is not feasible for long-distance haulage drivers.
In addition, many EVs are constructed from cutting-edge materials using bespoke manufacturing techniques which means they are far more costly to repair following damage.
The UK Government currently only assesses the CO2 emissions of EV vehicles on a well-to-tailpipe basis. This means that the CO2 emitted across the whole lifetime of the vehicle, including that produced from the generation of the electricity used to charge the batteries are omitted from the “zero-emission” moniker. Currently, the UK produces its power overwhelmingly from fossil-derived energy sources, such as natural gas. This means that the CO2 output per kWh of grid electricity (accounting for current UK renewable energy capacity) is less than 20% lower than the equivalent per kWh emission from Diesel fuel. Recent studies published by organisations such as the Institute of Mechanical Engineers also highlight the increased carbon footprint associated with EV manufacture as well as their batteries. (you might want to add a link)
HVO is a true drop-in alternative to diesel which means no upfront investments or equipment modifications are needed to ensure compatibility, compared to electric and hydrogen which require a huge outlay in both money and time. It, therefore, offers the user the ability to fully pay down the carbon emission embedded within existing equipment whilst dramatically reducing its ongoing contribution to GHG emissions whilst in use.
From a renewability perspective, HVO is fully certified by the International Sustainability Carbon Certification (ISCC) and meets the international fuel standard EN15940. Therefore, due to the chemical structure of HVO as well as the technical backing of EN15940, it requires no capital expenditure on modifications whatsoever, allowing you to prolong the life of your current assets. This removes cost barriers and enables a seamless transition and a practical step towards decarbonisation.
Reduced need for costly regular testing
Traditional biofuels and diesel products that belong to the FAME (Fatty Acid Methyl Ester) group have a bad reputation for causing performance issues in cold weather and fluctuating temperatures, which can require costly maintenance and infrastructure changes.
FAME fuels are produced by esterifying vegetable oils or animal fats with methanol. These esters are hygroscopic which means they attract water, which is bad news for biofuels as this provides the perfect breeding ground for diesel bug bacteria.
But HVO removes these problems, providing superior performance from day one. That’s because HVO is not a biodiesel. It’s a 100% advanced renewable fuel that’s FAME and ester-free.
HVO is produced through the hydrotreatment of vegetable oils; hydrogen is used as a catalyst instead of methanol which removes oxygen from the fuel, therefore avoiding diesel bug attack.
This production process converts the molecular structure into a paraffinic hydrocarbon which results in a fuel that has the same characteristics as fossil diesel but without the impurities that cause high levels of polluting emissions due to poor combustion performance.
Year-round performance – no need for seasonal stock replacements
HVO has a CFPP (Cold Filter Plugging Point) of -32oC which is much lower than diesel so you needn’t worry about the fuel waxing or freezing in winter. This means it doesn’t have seasonal grades like diesel, so you won’t need to empty your fuel stocks of summer grade fuel ahead of the cold months.
Because HVO is FAME and ester-free, it doesn’t attract water and resists microbial contamination which means you can store it for up to 10 years, compared to just 1 year for FAME diesel products. HVO is virtually a maintenance-free fuel and significantly reduces the costs needed to preserve its quality.
Safer fuel that reduces the risk of environmental damage
HVO has a higher flashpoint than diesel which makes it much safer in terms of handling and storage. It’s also biodegradable and insoluble in water, which means there’s a reduced risk of environmental damage in the event of a spill or leak which will reduce the associated clean-up costs.
How can Crown Oil further reduce the costs of switching to HVO?
We hope that the government follows in Sweden’s footsteps to help achieve our net zero carbon target. They passed legislation in 2017 making HVO exempt from tax, which led to a 124% increase in HVO sales in October 2017 compared to October 2016. HVO is subject to the same high taxes and duties as regular diesel in the UK which is hindering uptake.
The extensive use of HVO shows that the tax exemption has given the desired result. It is very positiveGustav Melin, CEO, Swedish Bioenergy Association (Svebio)
At Crown Oil, we can offer HVO fuel on a fixed-rate basis to help manage price risk for your business. You’ll receive a dedicated account manager who will help take care of your fuel orders, allowing you to arrange delivery when prices are at their lowest.
While electrification and hydrogen are the long-term objective for businesses, in most instances they are not feasible in terms of cost and application in the short or medium term. By shooting high, the UK government will create a bridge between fossil fuel sources and technologies that are not ready yet. HVO fills that gap as a practical, affordable and easy-to-implement solution that can be called upon now to reduces up to 90% of net CO2 emissions right away.
Once businesses begin to link the cost of HVO with its immediate and tangible benefits and the simplicity of switching compared to electric, then the price becomes more attractive.
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