The previous Government announced last November its intention to introduce a 1p/litre duty differential in favour of diesel with a sulphur content of 0.005% or less. Standard diesel has a permitted sulphur content of up to 0.05%.
The move is intended to equalise the price of the two fuels at the pump so as to help reduce emissions of particulates. According to the Treasury, the use of low-sulphur diesel can cut particulate emissions by "up to" 30% below the levels emitted with standard diesel, although the oil industry says that the reduction is no more than 15%.
Bigger reductions may be achieved in the future because low-sulphur diesel helps to improve the effectiveness of particulate traps and catalysts, which are still a rarity in the UK. In the short term, however, the duty differential will do little to boost uptake of the only low-sulphur diesel currently on sale in the UK, which is claimed to reduce particulate emissions by well over 30% but is more comprehensively reformulated and costs 2-3p/litre more than standard diesel (ENDS Report 262, pp 3-4 ).
The duty differential required authorisation under EC rules on harmonisation of taxes on mineral oils, and this was agreed by the Council of Ministers on 30 June. Customs & Excise says that the reduced duty on low-sulphur diesel will be introduced "as soon as possible" after the Finance Bill receives Royal Assent, due just before the summer recess.