A Fine Gael councillor is urging the government to urgently overhaul the VAT policy on Hydrotreated Vegetable Oil (HVO) biofuel.

Louth county councillor and small farmer John Reilly said "HVO is a proven, low-emission, drop-in replacement for diesel"

Cllr Reilly, who previously worked in the oil industry, added that HVO is capable of reducing greenhouse gases by up to 90%, according to several independent industry assessments.

HVO

HVO is a low-carbon biofuel made from waste, byproducts and derived products not intended for human consumption from the food industry.

Under current VAT rules, farmers using HVO pay a VAT rate of 23%, while traditional marked mineral oil, known as green diesel, is taxed at 13.5%.

Cllr Reilly said that the government needs to realign its tax policies with Ireland’s environmental goals.

"As a small farmer, this is the busiest and most fuel-dependent time of the year.

"Ploughing, sowing, and preparing the land demand long hours and significant fuel.

"Having spent years in the oil sector, I know the current fuel tax system and right now, it penalises farmers who choose cleaner, greener fuel," he said.

VAT

Cllr Reilly said it is "illogical that the cleanest fuel is taxed the most".

He claimed that while sectors like haulage, logistics, local authorities, and emergency services are adopting HVO, "Irish farmers are being left behind due to outdated tax policies".

"Farmers are already battling rising costs, and yet, for choosing a fuel that can cut emissions by 90%, they face the highest VAT rates," he said.

Cllr Reilly has called on both Minister for Finance Simon Harris and Minister for Agriculture, Food and the Marine Martin Heydon to take action on the matter.

"If the government truly wants to lead on climate action in agriculture, it cannot continue to treat the cleanest fuels as luxury products. This policy must change, now," he said.

Fuel

Meanwhile, the government is currently finalising a set of measures aiming to offset the increasing cost of fuel resulting from the war that has broken out involving the US, Israel and Iran.

It is understood these measures will be confirmed on Tuesday (March 24) to coincide with a meeting of cabinet that day.

There have been calls from across the agri-sector for any measures announced by the government to include a reduction in the cost of agricultural (green) diesel.