HVO Fuel Cost Savings For Local Government Fleets

As local governments work towards sustainability targets, reducing operational costs remains a top priority, especially for those managing large vehicle fleets. One of the most promising solutions is Hydrotreated Vegetable Oil (HVO) fuel, a renewable diesel alternative that offers both environmental and financial advantages. For procurement managers and finance directors overseeing public sector fleets, HVO fuel cost savings for local government fleets represent a significant opportunity to reduce the total cost of ownership (TCO) without compromising operational efficiency or environmental goals. This article will explore how transitioning to HVO fuel can deliver significant cost savings for local government fleets in both the short and long term.

When evaluating fuel choices, local governments must consider the TCO, which encompasses not just fuel prices but also maintenance, vehicle longevity, and operational efficiency. While the initial fuel cost is a critical factor, long-term operational expenses like maintenance and vehicle downtime can contribute more significantly to a fleet’s overall budget.

HVO fuel offers a unique opportunity to address both sustainability goals and cost-efficiency. Its compatibility with existing diesel engines eliminates the need for new vehicle purchases or costly engine conversions. By switching to HVO, local governments can avoid infrastructure investment while reducing emissions, making it a fiscally responsible and environmentally sound choice.

One of the most immediate financial advantages of HVO fuel is its ability to be used as a direct drop-in replacement for diesel in existing vehicles. This compatibility reduces upfront costs significantly by eliminating the need for modifications to current fleets. As HVO fuel has a higher cetane number (the measure of fuel’s combustion quality) compared to traditional diesel, it improves engine efficiency and performance, leading to better fuel economy. Fleets using HVO may find they use less fuel overall, thereby reducing fuel purchases.

In addition, According to a 2022 study by the Roosevelt Institute, HVO’s renewable nature makes it more stable in price compared to fossil-based fuels, providing greater financial predictability for local government budgets. Unlike fossil diesel, which is subject to volatile market fluctuations, HVO fuel offers more stable pricing due to its sustainable production from waste and renewable sources.

While the immediate benefits of switching to HVO fuel are evident, the long-term financial gains are even more compelling. A recent scientific study published in Applied Sciences in 2024 examined the effects of HVO on emissions and engine performance. The study found that using HVO as a fuel in compression ignition engines resulted in significantly lower emissions of particulate matter (PM) compared to conventional diesel fuel. Specifically, PM emissions were reduced by up to 75% at low engine loads and by 43% overall in specific tests. Additionally, while nitrogen oxides (NOx) emissions were generally higher at maximum loads with HVO, they were lower by up to 17% as the load decreased.

These cleaner burning properties of HVO fuel result in lower emissions and reduced engine wear, extending the life of vehicles and cutting down on maintenance costs. Engines running on HVO require less frequent oil changes and servicing, which translates into less vehicle downtime and reduced labour costs for fleet maintenance.

Additionally, HVO fuel has a significantly longer shelf life compared to conventional diesel, making it ideal for local government fleets that may need to store fuel for extended periods. This extended shelf life reduces fuel waste and associated storage costs, further contributing to long-term financial savings.

It is true that HVO fuel typically comes with a higher upfront cost compared to conventional diesel. However, this price premium is more than offset by the reductions in operational costs over time. The improved fuel efficiency, extended vehicle life, and decreased maintenance requirements lead to considerable savings in the overall TCO of the fleet.

Fleet management majors, fuel providers and green NGOs are urging the UK Government to cut taxes on lower-carbon alternatives to diesel for the haulage sector. If this pressure is successful the potential for government incentives and tax breaks related to using renewable fuels like HVO can further mitigate any initial cost differences. By adopting HVO, local governments can position themselves to benefit from future policies favouring lower-carbon solutions, potentially unlocking additional financial incentives as more stringent emissions regulations come into effect.

Several organisations across the UK have adopted HVO fuel to achieve significant environmental and financial benefits. For instance, DB Cargo has demonstrated the effectiveness of HVO in its rail and locomotive engines. Their case study highlights that HVO fuel significantly reduces wear and tear on engines, helping to extend the lifespan of engine components. This is particularly due to HVO’s clean-burning properties, which lead to lower particulate emissions and less buildup inside the engine.

As a result, fleet operators using HVO, such as those in rail, have reported longer service intervals and reduced maintenance costs, contributing to substantial operational savings. Additionally, the use of HVO has been linked to smoother engine performance and improved fuel efficiency, further enhancing cost-effectiveness for long-term fleet operations​

For local governments seeking to balance budgetary constraints with environmental responsibilities, HVO fuel presents an optimal solution. It offers immediate cost advantages through its compatibility with existing fleets and improved fuel efficiency, as well as long-term savings via reduced maintenance, longer fuel storage, and extended vehicle life. Although HVO may carry a slight price premium initially, its financial benefits—especially in total cost of ownership—far outweigh these concerns.

For procurement managers and finance directors, the decision to transition to HVO fuel is not just about sustainability but about securing cost-effective fleet management for the future. By investing in HVO, local governments can achieve their green objectives while maintaining fiscal responsibility, making it a strategic choice for public sector fleets.