UK Government Support for HVO Heating Oil

As the United Kingdom continues its journey toward net zero emissions by 2050, the conversation around alternative fuels has taken centre stage. One of the most promising contenders in the domestic heating sector is Hydrotreated Vegetable Oil (HVO). This renewable diesel substitute is being increasingly adopted in off-grid homes across the UK, offering a lower-carbon solution to traditional heating oil.

But what role is the UK government playing in supporting the switch to HVO heating oil? In this article, we will explore the policy landscape, incentives, challenges, and future prospects of HVO as a sustainable heating alternative — with a focus on domestic consumers and suppliers in the UK.

What is HVO Heating Oil?

Hydrotreated Vegetable Oil (HVO) is a renewable, paraffinic fuel made from 100% waste and residue feedstocks, such as used cooking oil and animal fats. It is chemically similar to traditional fossil-based diesel and heating oil, but with a significantly lower carbon footprint — up to 90% fewer lifecycle CO₂ emissions.

For domestic users, especially those living in rural and off-grid areas where access to the gas network is limited, HVO offers a drop-in replacement for kerosene-based heating oil. It requires little to no modification to existing oil boilers, making the switch cost-effective and efficient.

The Role of the UK Government

The UK government has long prioritised carbon reduction, particularly in heating, which accounts for around 17% of UK carbon emissions. With more than 1.7 million UK homes still using heating oil, HVO represents a scalable alternative. Here’s how the government is supporting its development and potential adoption:

1. Inclusion in Renewable Energy Consultations

The Department for Energy Security and Net Zero (formerly BEIS) has held multiple consultations concerning the future of low-carbon heating in off-grid properties. HVO has featured prominently in discussions as an alternative to heat pumps or biomass, especially for properties where other options are not viable due to insulation limitations or cost barriers.

Industry advocates, such as OFTEC and UKIFDA, have actively campaigned to highlight HVO’s advantages. Their joint demonstration projects, supported by government insights, have provided real-world evidence on the feasibility of transitioning from kerosene to HVO.

2. HVO Pilot Schemes and Trials

Over the last few years, the government has shown support through pilot projects, including the Future Ready Fuel initiative. These pilot schemes have successfully converted hundreds of homes from kerosene to HVO with minimal infrastructure changes.

Notably, these conversions have proven that:

• HVO can be used in existing oil heating systems with a low-cost nozzle and fuel line adjustment.

• There are immediate emissions savings without requiring expensive renovations.

• Consumers have reported equal or improved performance compared to kerosene.

These trials have laid the groundwork for wider national acceptance — and for encouraging government policy to back broader rollouts.

3. Policy Proposals for Off-Grid Heating

In its “Heat and Buildings Strategy” published in 2021, the UK government proposed to phase out the installation of new fossil fuel boilers in homes off the gas grid by 2026. The plan primarily pushes electric heat pumps, but concerns remain over their feasibility in older rural properties.

In response, industry organisations and MPs have pushed the government to include HVO in fuel decarbonisation strategies — highlighting its suitability as a transitional or long-term solution for the UK’s most challenging properties. While not yet enshrined in policy, lobbying efforts and grassroots support have prompted ongoing discussions within Westminster.

4. Reduced VAT and Potential Incentives

Currently, HVO is not taxed as favourably as other renewable heating fuels. However, there is mounting pressure to standardise VAT rates across all renewable heat options and to consider financial incentives for HVO adopters.

Proposed measures include:

• Reducing the VAT on HVO for heating to match that of domestic electricity (5%).

• Introducing government-backed grants or subsidies for conversion equipment.

• Creating an HVO heating certification scheme to track environmental performance.

Such financial moves would make HVO more competitive and affordable for UK homeowners.

5. Environmental and Supply Chain Support

The UK government also funds research into sustainable fuel production, including feedstock security for renewable fuels. Ensuring a steady, ethical supply of waste oils and fats is essential to scaling HVO without harming global food chains.

Organisations like the Renewable Fuels Assurance Scheme (RFAS) ensure UK HVO meets sustainability criteria — a framework encouraged by the government to prevent "greenwashing" and protect the environment.

Challenges to Full Government Endorsement

Despite its promise, several challenges remain in the path of full governmental support for HVO heating oil:

• Availability and supply chain maturity: HVO is not yet widely available across all regions.

• Price sensitivity: It remains more expensive than kerosene due to limited production and high demand from the transport sector.

• Lack of formal subsidies or incentives: Without government grants or tax breaks, consumers bear the full burden of switching.

However, these are transitional barriers — not permanent blocks. With coordinated policy, investment, and consumer demand, HVO could become a leading solution in low-carbon domestic heating.

The Future of HVO Heating in the UK

As public demand for green energy alternatives grows and the UK approaches its decarbonisation deadlines, HVO is well-positioned to play a significant role in the rural heating mix. Continued government support — both in terms of policy inclusion and financial backing — will be critical in helping it reach full market potential.

For now, homeowners and suppliers should stay informed, engage with pilot programs, and support local advocacy to push HVO into mainstream adoption. With the right legislative support, HVO could very well become the go-to heating oil for a cleaner, greener UK.

Final Thoughts

The shift to renewable heating in the UK is inevitable — and HVO offers a practical, immediate pathway for homes off the gas grid. Government backing is growing, but more decisive action is needed to unlock its full potential. With the right incentives, policy integration, and public awareness, HVO heating oil could revolutionise how the UK heats its homes — sustainably.