At What Cost? Green Fuel!!!

The shift to green fuel is everywhere. It’s the future, they say. Cleaner air, less pollution, and a healthier planet. But is it really that simple? I’ve been digging into what green fuel means for businesses across Scotland, especially those in haulage, distribution, and storage. It’s a big change, and it comes with costs you might not expect.

The UK road haulage industry is facing significant, cumulative cost increases starting in late 2026, driven by a combination of phased-out fuel duty freezes, higher vehicle excise duties, and the adoption of more expensive green fuels. The Road Haulage Association (RHA) has warned that these measures,, particularly the reversal of the 5p fuel duty cut, will place severe pressure on an industry already operating on "wafer-thin" margins of 2–3%.

Opus Business Advisory Group +5

Key 2026 Cost Drivers for Road Haulage

• Fuel Duty Reversal (Staggered Increases): The temporary 5p-a-litre reduction in fuel duty will end on 31 August 2026, followed by a series of increases:

  • 1 September 2026: +1p per litre.

  • 1 December 2026: +2p per litre.

  • 1 March 2027: +2p per litre.

• HGV Levy and VED Rises: From April 2026, both the HGV Levy and Vehicle Excise Duty (VED) are set to increase in line with inflation.

• Green Fuel and Carbon Costs: Rising obligations under the Renewable Transport Fuel Obligation (RTFO) and increasing carbon taxes are driving up the cost of diesel and, consequently, alternative fuels.

• Operating Cost Pressure: The RHA has reported that overall operating costs for HGVs have risen by 10% in the past year, with 70% of operators having no immediate plans for zero-emission vehicles due to high investment costs.

  Opus Business Advisory Group +7

Impact on the Sector

• "Inflationary Timebomb": The RHA warned that reversing the fuel duty freeze could add £7.3 billion to the cost of living between now and 2029, as hauliers are forced to pass these costs on to consumers.

• Financial Strain: The combination of higher taxes and fuel costs could cost an average HGV operator an additional £3,000 per vehicle, per year.

• Industry Vulnerability: With 49.2% of haulage businesses established since 2019 having already entered insolvency or closed, the added 2026 costs could lead to further business failures.

  

  ...at what cost?