For the purpose of this response, we are considering the use of red diesel for rail haulage. Some RFG members may use red diesel for other purposes and may respond in their own right.
Over 90% of all rail freight is hauled by diesel locomotives, with the remainder electric. Rail freight, as with rail passenger services uses red diesel throughout its operations.
Red diesel is used for all activities by locomotives, including shunting in yards and sidings as well as main line haulage. However, any road activities undertaken by rail operators, for example the final delivery of containers, would use road diesel paying the standard tax rates.
Use of red diesel for haulage recognises that the charging regime for the rail freight is structurally different to that of road freight. Rail freight pays a track access charge to Network Rail for every ‘tonne-km’ moved. This is based on the wear and tear costs incurred, the wagon and locomotive type used, and the volume and weight of the products moved. There are further charges for certain bulk commodities such as coal and iron ore, plus a charge to reflect the capacity used on the network, charges for any delay caused by freight trains and additional charges for electric services.