Certas Energy is the UK’s largest independent distributor of fuel and lubricants in the UK, with a diverse customer base spanning rural residential customers, small, medium and large businesses and farms. It has specialist sector teams for marine, fuel retailing and lubricant customers and, in the road transport sector, Certas Energy has built a reputation for its growing business supplying the renewable biodiesel hydrotreated vegetable oil (HVO).
Certas is owned by DCC, a Dublin-based FTSE 100 energy, healthcare and technology business with a turnover of close to £3.9bn. Its delivery network comprises more than 94 depots, 900 tankers and over 2,500 employees at time of writing in October 2024.
Ollie Bradshaw, sustainability lead at Certas Energy, came to the company when his previous employer Green Biofuels was acquired by Certas Energy in November 2023 after running into financial difficulties.
“Certas Energy supplies around 4bn litres of fuel each year and the goal by 2030 is to supply 1bn litres of HVO,” says Bradshaw. “Some of that will come from transitioning existing diesel customers to HVO, but a lot will be new business.”
One of the beauties of HVO is that it behaves exactly the same as fossil diesel so rolling it out across the network requires no modification to tanks or other equipment.
“Around 40 depots are storing HVO and there are plans to increase that number as demand grows,” says Bradshaw. “In order to get to 1bn litres we need it in a lot more storage locations.”
As well as its depots, Certas Energy has 10 HVO terminal locations where it imports fuel, and having such a large distribution and storage network enables Certas Energy to protect itself from the volatility in HVO prices that have been seen in recent years.
“We can reduce that exposure as we can fill those positions with HVO when the market is what we consider to be a favourable rate, and if the price goes up, we’re relatively protected,” says Bradshaw. “That gets fed through to customers so that’s one of the competitive advantages of Certas Energy.”
The ability of HVO to cut carbon emissions from diesel vehicles by up 90% has seen growing numbers of fleets invest in switching over all or some of their operations as an interim measure until zero emission battery electric vehicles become a more practical proposition.
“Green Biofuels was one of the pioneers of HVO supply in the UK,” says Bradshaw. “They really put it on the map when the UK market was somewhere in the region of 10m litres. By 2022, it was about 220m and in 2024 on the current trajectory, we’re going to get to about 600m litres. Certas Energy is probably about 25% to 30% of that.”
Road transport has to compete with other industries for HVO and it accounts for less than 40% of Certas Energy’s total UK HVO volumes.
“There are other non-road markets that we’re involved in, including mobile machinery and construction. We do have marine customers, but that is a relatively small proportion,” says Bradshaw. “It is ideal for heavy duty internal combustion engines which will struggle to decarbonise by electrification because the infrastructure and technology are not quite there.
“We anticipate demand from road haulage will continue to grow in the next 10 to 15 years, but whether it will grow faster than the other sectors is quite hard to judge.”
The need to use renewable fuels in other hard to decarbonise sectors and leave road transport to focus on zero emission battery electric vehicles is one argument against putting more HVO in trucks, but Bradshaw says there is enough feedstock to go around.
“While HVO is primarily associated with used cooking oil, there are a whole host of other approved feed stocks including palm oil mill effluent or spent bleaching earth (SBE), tallow, food waste, brown grease etc,” he says. “There is a lot of investment and research going into new feedstock pathways.
“We’re not collecting all the waste that exists, and the efficiency with which we can do that can improve and will improve. The feedstock pool options will increase with things like renewable fuels of nonbiological origin including end of life tyres. That rubber can be collected and turned into a combustible gas so that’s a renewable feedstock.
“Municipal solid waste that would otherwise go to landfill can, through various processes including pyrolysis, also be turned into a combustible fuel. So there are plenty of feedstock pathways being developed.”
One estimate is European consumption of HVO was 7bn litres in 2023 and that by 2035 it will rise fivefold to 35bn litres. “There is an exponential increase in HVO coming,” predicts Bradshaw.
While Certas Energy has supply agreements for 800 retail forecourts, including 400 Gulf-branded sites, it does not currently sell HVO on service stations, and most deliveries are to operators’ on-site bunkers. Its fleet of 900 tankers ranges from rigids to 44-tonne artics and drops can be anything from 6,000 litres to 36,000 litres depending on the size of the customer’s tanks.
There is no minimum order requirement and some of Certas Energy’s customers might only use 10,000 litres a year, though Bradshaw explains that the smaller the volumes the higher the cost to serve and this will be reflected in the price.
“We can deliver directly to the customer using our own vehicles, but we can also supply ex-rack, so a customer can turn up to the rack and lift from one of our positions,” says Bradshaw. “It all depends on the customer requirements.”
Certas Energy does however own over 800 retail forecourts in five European countries (France, Denmark, Norway, Ireland and Luxembourg), and has contracts to supply around 200 more dealer-owned sites, while bp now has HVO available on a limited number of its larger forecourts in the UK.
“Our sister company, Certa, in the Republic of Ireland does have roadside fuel services,” says Bradshaw. “Getting HVO into UK fuel stations is certainly on the radar.”
Several sources
There is no HVO refined in the UK but there are now several sources of the product to rival market leader Neste in Finland.
“Neste were the main supplier and they have also got positions in Rotterdam, Singapore and the US,” says Bradshaw. “As legislation changes, with the Renewable Energy Directive in the EU and the RTFO [Renewable Transport Fuels Obligation] in the UK, that sets out bio blending targets year on year.
“So that allows the big oil companies to say ‘we know x million litres are going to be needed in this country in this year, and therefore we can invest in switching existing fossil refining capacity to bio or build entirely new facilities’. When I was at GBF, that capacity was limited to Neste and a couple of others but now HVO refining capacity is exponentially larger, and is expected to continue to grow.”
The US is now a large producer and most of the large oil companies sell HVO in the US and Europe. China is also a very large biofuel producer but has been hit by anti-dumping import tariffs.
“Obviously they want to encourage domestic production, rather than relying on imports from China, so anti-dumping duties on Chinese-derived feed stock and biofuels, something like 35%, will be locking out quite a considerable amount of Chinese biofuel,” Bradshaw says.
Some operators remain sceptical about just how renewable the feedstocks used to produce HVO really are but Bradshaw assures them that Certas Energy can guarantee its HVO is made from 100% waste not virgin crops because all its product is underwritten by the International Sustainability and Carbon Certification (ISCC) scheme.
“That covers the entire biofuel supply chain, from the point of origin to the regional collection point, to refinement, storage and then distribution into whatever country,” says Bradshaw. “That also involves auditing so there are a lot of checks and balances in place across the entire supply chain. So when we buy a cargo, we will receive a proof of sustainability from the ISCC.”
Under the UK RTFO, all diesel for road vehicles must contain at least 7% bio content – a B7 blend – but most of this is from fatty acid methyl ester (FAME) rather than HVO simply because the former is cheaper. But ISCC certification of the HVO Certas Energy imports enables it to collect certificates under the RTFO.
“Along with our importation documents, that allows us to make an application under the RTFO to receive Road Transport Fuel Certificates,” explains Bradshaw. “That then allows us to basically subsidise the fuel to our customers, because the whole point of the RTFO is to encourage the uptake of biofuels.
“Once it’s in the country, and it’s received the RTFCs, then the Renewable Fuels Assurance Scheme covers the downstream distribution accreditation. So the ISCC works up to the point where we’ve got that product sat in our locations in the UK, and then the RFAS takes over until it gets distributed to the customer.
“We then issue quarterly renewable fuel declarations to our customers stating they had this many litres of fuel which has got the carbon intensity of 16 grams of CO2e per mega joule, the feed stocks are x, y and z, and they’ve come from these countries.”
While leading operators such as Hovis and DPD have shown that switching to HVO is an easy – though not cheap – process that has no effect on vehicle reliability, some operators still associate the product with previous bad experiences with FAME biodiesel.
“There’s obviously a difference between biodiesel and biofuel,” says Bradshaw. “HVO is second generation advanced biofuel made from waste and residue-derived feedstocks which are hydro-treated in the presence of a catalyst at high temperatures and pressures. That removes a lot of the impurities like water and oxygen, which were not removed from first generation biodiesels such as FAME. That is what causes storage issues and a less complete combustion of the fuel molecule.”
Those storage issues included moisture and algae build up while the inefficient combustion produced particulate matter which blocked DPFs. None of these issues apply to HVO.
The major barrier to more fleets adopting HVO is not fear of the trucks refusing to run but price. Early adopters like bread baker Hovis have had to temporarily revert to fossil diesel as the price premium of HVO rose about 25%. While supply and demand clearly has a role in pricing, the production costs bear no relation to the price of oil yet many suppliers still price HVO at a set percentage over diesel.
“That’s just an understandable metric to buy at and sell it to customers who have been buying their diesel historically on say the Platts Index,” says Bradshaw. “That’s what they’re familiar with so at the moment a lot of customers want to buy on a Platts-plus premium.
“Argus is at the forefront of those biofuel indexes, and you’ve also got Platts Biofuels and Portland, but they all give you a different number because it’s a relatively illiquid market and not as transparent as crude oil. So it tends to be a theoretical assessment, as opposed to a physical assessment.”
The RTFC is another complicating factor as HVO qualifies for double certificates and as the price of these fluctuates this can influence the price of HVO.
“The feedstock and the hydrogen, which tends to be steam methane reformed hydrogen from natural gas, are the main cost inputs,” says Bradshaw. “Then there are the foreign exchange movements and the supply and demand fundamentals that govern every other commodity.”
As Green Biofuels found out, with so many variables trading HVO is not an easy thing, as the price premium over diesel fluctuated wildly over the last two years from 10ppl to 60ppl to stand at around 25ppl at time of writing in October 2024.
“In 2023 getting customers to convert was really difficult, because then that was a huge increase in their fuel cost,” says Bradshaw. “We now offer both spot and forward pricing but a lot of our customers still want to buy spot, especially those who are not fully committed yet. They may have a particular site where they know there’s a Certas location nearby and they want to trial it on a couple of loads each week.
“But then you’ve got your other customers who are further along on that journey and will commit so we will fix prices for one or two years. We prefer to do one year, just because that provides flexibility for ourselves and the customer. Because we’ve got such an extensive storage network we’ve got a large position that allows us to fix and protect customers and ourselves from any price volatility.”
Government can help boost sales of HVO
One thing the government could do to help boost sales of HVO is to align fuel duty with the carbon intensity of the fuel rather than maintain the arbitrary discount for gas until 2032 as the previous government pledged to do.
The government has so far remained tight-lipped on the role of renewable fuels in the road to net zero but remains wedded to phasing out sales of non-zero trucks over 26 tonnes in 2035 and all weights from 2040. So unless policy changes to allow the use of low carbon renewable fuels in internal combustion engines after those dates, investments in producing and distribution HVO for the road transport market might have to be paid back in the next 20 years or so.
Of course diesel trucks will be on UK roads for up to 10 years after those end of sale dates, and by then the government may well mandate that they have to run on low carbon fuels, so Certas sees a rosy future for HVO.
“Certas is an energy transition company, primarily in fossil diesel but moving to HVO, because that seems to be the most logical way to decarbonise in the short to medium term of 10 to 15 years - and probably longer,” says Bradshaw. “For us there isn’t really much investment cost, because the infrastructure for fossil diesel already exists and it is the same for HVO as it is a drop-in product.
“Even if they do prohibit diesel ICE being bought after 2035, you’ve got customers who want to buy their fleets on long-term plans over eight to 12 years, so they are not just going to pack it all in come 2035 and have that huge outlay on electrification, if that technology even exists.”
In his personal opinion, Bradshaw does not see a viable future for hydrogen in road transport.
“The infrastructure is not there for hydrogen,” he says. “The hydrogen molecule is such that it would leak out of our existing pipe network so it would have to have a complete overhaul. I don’t think there’s going to be one single answer. It’s going to be a multi-faceted approach, and hydrogen may be suitable for a particular industry but I’m not sure it’s going to be road transportation.”
Case study: T&J Haulage
Family-owned haulier T&J Haulage has switched its deliveries for one Scottish customer to HVO supplied by Certas Energy and found the transition trouble-free.
Based in Ribble Valley, Lancashire, T&J this year celebrates its 40th anniversary. Steph Crack, pictured, transport and compliance manager at T&J Haulage, says the requirements of customers set them on their green journey, but their own extensive research confirmed HVO was the best choice for moving forward.
It all started when a Scottish customer that was committed fully to HVO asked for some support during harvest season, but required the trucks to run on HVO.
“We were a bit dubious,” admits Crack. “We didn’t know a great deal about it, but our client reassured us and when our driver came back, he had a lot of positive things to say about it. At that point a seed was planted and we decided to have a look ourselves as a responsible haulier.
“We looked at electric but we were completely priced out. The electric trucks don’t have the range, cost a lot more to buy and they are 4 tonnes heavier than diesel – when you get paid by the tonne that has a huge impact. On a conservative estimate, we could potentially lose around 63,000 tonnes of payload a year across the fleet – it just doesn’t make financial sense. That would also create a further 2,520 journeys just to cover those missed tonnes!”
Because HVO is a drop-in alternative to standard diesel, and doesn’t require any modifications, T&J Haulage has been able to use HVO exclusively for their customer – which equates to running one truck in their fleet of 21 on HVO constantly.
Crack says: “We are still at the beginning of our journey, and at the moment the use of HVO equates to just over one truck a week, which is nearly 5% - it’s a toe in the water but it makes a big difference to the environment.”
The firm’s decision to introduce HVO was made easier Certas Energy’s FuelTapp, the UK’s first digital fuel card which enables users to pay for fuel at Certas Energy bunker sites using an app-generated PIN. It makes it possible for drivers to switch seamlessly between fuels on each journey according to the client’s needs. It also helps eliminate lost or cloned cards.
- Hear the full story on Certas Energy’s podcast HVO on the Road
