A British demonstration village has now run on liquid biofuel for five heating seasons. The technology was never the problem. The tax was — and it still is in Denmark.
On 1 September 2026, the British trade association OFTEC and the Future Ready Fuel campaign marked an anniversary: five years of HVO in the Cornish village of Kehelland.
It is worth pausing over. Not because an English village is big news in itself, but because Kehelland is something rare in the energy debate: a full-scale, multi-year field trial with real households, real winters and real bills.
What the trial actually involved
Kehelland lies off the gas grid. The houses were heated with kerosene — what in Denmark is called heating oil. In 2020 the local fuel distributor Mitchell & Webber, together with the trade associations UKIFDA and OFTEC, began replacing the fossil oil with HVO: liquid biofuel produced by hydrotreating used fats, in practice mainly used cooking oil.
Seventeen households took part. So did the village church and school. The trial has since expanded to more than 150 properties nationwide.
The figures from the conversion are the interesting part:
| The Kehelland trial | |
| Conversion per property | approx. £500 |
| Time per property | approx. 1 hour |
| Boiler replacement | No |
| CO₂ reduction vs. heating oil | approx. 88–90% |
| Alternative: full heat pump conversion | approx. £22,000 per property |
The boiler stayed. The burner got new nozzles and seals, the tank was cleaned, and the house carried on. An hour’s work and a sum in the region of DKK 4,500 (about £500), against a full conversion at around DKK 200,000.
“It shows that the green transition can begin without any capital cost, without disruption and with only limited additional running costs.”
Ken Cronin, Chief Executive, UKIFDA
Five years on, the residents are still in — and still impatient
The remarkable thing is not that it worked in the first season. It is that the systems are still running after five years. None of the technical concerns — wax separation in the cold, degraded seals, unstable combustion — has turned out to be a showstopper in practical operation.
At the anniversary event, however, the mood was mixed, according to OFTEC. The residents have been visited by MPs, civil servants, ministers and committees. They have answered questions, written consultation responses and travelled to London to hand in their responses in person. As one resident put it: “We tell them what a wonderful solution it is, they listen and say all the right things, but nothing happens.”
Asked why they took part, the residents say something that should sound familiar to any heating installer: they wanted to contribute, several already had solar panels and an electric car — but the heat pump quotes were too expensive, there were concerns about the local electricity supply, and they wanted to be able to choose for themselves. “Nobody likes being told what to do.”
What the campaign is asking for is not subsidies
Future Ready Fuel and OFTEC are not asking the British government for a grant pot. They are asking for two things:
- A supplier obligation for renewable heating fuel — a Renewable Liquid Heating Fuel Obligation, modelled on the one that already applies to transport fuel.
- Tax parity between HVO for heating and heating oil.
Point two is the whole story. In the UK, HVO for heating costs roughly twice as much as kerosene — and a significant part of the difference is tax on a product whose CO₂ footprint is up to 90 per cent lower.
And here it becomes Danish
We have been running our own field trial since autumn 2024: Danish homes where fossil heating oil has been replaced by HVO in existing oil boilers over full heating seasons. Our experience is the same as Kehelland’s. The systems run. The technology was never the problem.
The problem is the tax rules — but not quite in the way you might think.
According to figures from the fuel supplier Biofuel Express (latest overview, 2025), the picture is more complex than it first appears. There is no CO₂ tax on pure HVO. But the energy tax is nevertheless higher than on heating oil: around DKK 2,460 per 1,000 litres against DKK 1,241 for heating oil — almost double. This is due to the EU minimum tax on energy products, which sets a floor for the energy tax on HVO regardless of the lower rate that biofuel for heating can, on paper, qualify for.
On the other hand, the CO₂ tax on heating oil has risen sharply after the Danish tax reform — to DKK 2,261 per 1,000 litres in 2025, against DKK 0 on pure HVO. This means the total tax on HVO (approx. DKK 2,471 per 1,000 litres) still ends up lower than on heating oil (approx. DKK 3,513) — but the gain comes entirely from the CO₂ tax exemption. The energy tax itself is higher on HVO, not lower, and that is the nuance that is often lost in the debate. The same pattern applies to the NOx tax: it is charged on a consumption basis on fossil fuels regardless of plant size, but on biofuels only for large plants above 1,000 kW. An ordinary domestic oil boiler is far below that threshold, so there is no NOx tax on pure HVO for home heating either.
So it is not the CO₂ tax, and it is not about blending in the tank — you simply switch from heating oil to HVO. The problem is that the energy tax itself on HVO is higher than on heating oil, because the EU minimum sets a floor that the Danish heating oil tax fell below long ago. That is the tax that has to come down if HVO is to compete seriously with heating oil on price.
Why it matters to the 118,000
According to the Danish building register (BBR) for 2025, around 118,000 Danish homes are still heated by oil boilers. A large share of them can and will convert to heat pumps or district heating, and are doing so in these years. Good.
But a significant share cannot within a few years: houses outside the planned district heating areas, poorly insulated houses where a heat pump only makes sense after a renovation of the building envelope, older homeowners in houses that are hard to borrow against, tenants who have no say over the boiler room, listed buildings.
Meanwhile, those houses are heated with something. The only question is whether it is fossil.
Kehelland is five years of documentation that it does not have to be — and that the bridge costs an hour and a few thousand kroner per house, not two hundred thousand and a place in the queue for a grid connection.
What we believe should happen
We are not proposing liquid biofuel as a permanent baseload for Danish home heating. Biomass is a scarce resource, and it has higher-value uses in heavy transport, shipping and process industry.
We propose it as peak load and as a bridge:
- Exempt liquid biofuel for heating from energy tax — conditional on verifiable origin, with feedstock collected within the EU and physical traceability rather than pure mass balance.
- Exempt blends from § 1(4) of the Danish Mineral Oil Tax Act, so that blending is not penalised.
- Define “fossil” by the molecule, not by the appliance. A system that demonstrably runs on green fuel is not a fossil system.
This costs no subsidy kroner, requires no new grid connection and no installer hour beyond the one that would be needed anyway.
Britain has spent five years proving that it works. Denmark does not need to spend five more finding out the same thing.
Arne Nielsen A/S has supplied burners, boilers and heating technology to installers, industry and marine since 1969 — today both combustion technology and heat pumps. We therefore have no single technology to defend, only an interest in homes being heated without fossil fuel.
Do you have a system where HVO could be the way forward? Write to us at info@arnenielsen.dk.
Sources
- Future Ready Fuel / OFTEC, newsletter 01.09.2026: “Happy Birthday HVO” — fifth anniversary of the HVO demonstration project in Kehelland.
- Future Ready Fuel: “Cornish village offers a blueprint for rural decarbonisation” — 17 households plus church and school, approx. £500 and approx. 1 hour per property, approx. 88% CO₂ reduction, heat pump alternative approx. £22,000.
- Fuel Oil News, January 2026: “Five years of proof: Rural community takes HVO case to Westminster” — more than 150 properties, quote from Ken Cronin (UKIFDA).
- UKIFDA / OFTEC: proposal for a Renewable Liquid Heating Fuel Obligation and tax parity with kerosene.
- Skattestyrelsen (Danish Tax Agency), reply to Arne Nielsen A/S, 26.08.2024: energy tax on HVO100 as heating fuel is paid at the same rate as the equivalent fuel, but no CO₂ tax.
- Biofuel Express A/S: tax overview for diesel/gas oil/kerosene products, 2025 (energy tax, CO₂ tax and NOx tax for heating oil and 100% biodiesel/HVO, DKK per 1,000 litres).
- EU Energy Taxation Directive: the minimum tax on energy products sets a floor for the energy tax on biofuel, regardless of the national rate for biofuel for heating.
- Skatteministeriet (Danish Ministry of Taxation): Nitrogen Oxides Tax Act (NOx), current rates 2026 (consumption-based NOx tax on biofuel applies only to plants above 1,000 kW; ordinary oil boilers are not covered).
- Danish Mineral Oil Tax Act § 1(4) (taxation of blends at the highest rate).
- Bolius/BBR: approx. 118,000 homes with oil boilers, 2025.
- Arne Nielsen A/S: own HVO field trial in Danish homes since autumn 2024.