When it comes to the cost of industrial heating fuel, kerosene usually works out cheapest, because it is the only one you can buy fully rebated for heating commercial premises. The right fuel for your site still depends on the burners you already run and what each option costs per kWh of heat delivered to your process.
This guide compares two major industrial heating fuels on the measures that matter to a production site. It also shows you how to benchmark fuel as a share of production cost and which savings your supplier controls and which sit with your plant.
In this guide:
- Kerosene and gas oil compared side by side
- What do duty rules mean for manufacturers?
- How to work out which heating fuel is cheaper to run
- Which heating fuel is best for your equipment?
- How can you save on industrial fuel?
- Industrial heating fuel FAQs
- Get a quote for your industrial heating fuel
Kerosene and gas oil compared side by side
Kerosene is fully rebated for heating any premises, while gas oil attracts full duty at a manufacturing site, and that duty gap outweighs gas oil's slightly higher energy content. The table below sets out how the two fuels differ on the points buyers ask us about most.
| Measure | Kerosene | Gas oil |
|---|---|---|
| Grade | BS 2869 Class C2 (28-second) | BS 2869 Class D (35-second) |
| Energy per litre (gross) | About 10.3 kWh | About 10.7 kWh |
| Burner fit | Kerosene burners | Gas oil burners |
| Duty for heating a factory | Fully rebated | Full duty (red diesel not permitted) |
| Cold weather | Low risk of waxing | Can wax in cold spells |
Calorific values are rounded from the UK Government greenhouse gas conversion factors 2026, published by the Department for Energy Security and Net Zero.
What do duty rules mean for manufacturers?
For most manufacturers, kerosene is the only liquid heating fuel you can buy at the rebated rate.
Since 1 April 2022, a manufacturing site cannot use red diesel to heat its premises or its process. HMRC only allows rebated gas oil for heat and electricity used primarily in non-commercial premises, such as NHS hospitals, state schools and places of worship.
Kerosene is treated differently. Under HMRC Excise Notice 75, a kerosene heating system can use rebated kerosene to generate heat for any premises. HMRC's definition of generating heat also covers heating water or other substances for processing on site.
Check two points before you switch:
- Engines are excluded: Rebated kerosene is for burners and boilers only. Generators and combined heat and power (CHP) engines fall under separate rules.
- Mixed use needs care: Rebated and duty-paid fuels must not be mixed in the same tank or system.
How to work out which heating fuel is cheaper to run
To compare fuels fairly, work out the cost per useful kWh for each one. This divides the price per litre by the energy each litre contains, adjusted for how efficiently your burner turns that energy into heat, and puts fuels with different energy content on a level footing.
The calculation is:
Cost per useful kWh = price per litre ÷ (kWh per litre × burner efficiency)
Gas oil holds about 4% more energy per litre than kerosene, so kerosene needs to be around 4% cheaper per litre to deliver the same heat for the same money. For manufacturers, the duty on gas oil used for heating is far larger than that gap. That is why each fuel's duty position matters more than its calorific value.
To put small price moves into context:
- Each 1p per litre on kerosene adds about 0.11p per useful kWh at 90% burner efficiency.
- A site burning 100,000 litres a year saves £5,000 for every 5p per litre it takes off its price.
Use your burner's measured combustion efficiency from its last service, not the nameplate figure. Nameplate figures are usually higher than real-world performance and can make a fuel look cheaper to run than it is.
Which heating fuel is best for your equipment?
The best fuel is usually the one your existing burners are designed for, unless the savings on duty make a changeover worthwhile:
- Space heating in factories and warehouses: Kerosene for kerosene burners, or gas oil where you run gas oil burners and want to avoid a conversion.
- Hot-water and steam boilers for washdown, cooking or curing: Match the fuel to the burner. Gas oil suits existing Class D plant, and kerosene suits new or converted plant.
- Direct-fired ovens and dryers: Check the equipment manufacturer's fuel specification first, as combustion gases may come into contact with your product.
- Sites with long storage periods: FAME-free gas oil avoids the moisture and filter problems linked to biodiesel content.
Switching a burner between kerosene and gas oil is not a like-for-like swap. Nozzles, pump pressure and air settings differ, so any change should be carried out and recommissioned by a qualified commercial combustion engineer.
How can you save on industrial fuel?
You can cut what you pay for each litre by changing how you buy fuel, without changing how much you burn. These are the areas we review with commercial customers:
- Fuel and duty choice: Buying the right grade at the right duty rate for how you use it.
- Delivery size: Full tanker loads usually cost less per litre than frequent small drops, and a larger tank lets you take them.
- Order timing: Buying outside peak winter demand can lower your price.
- Multi-site supply: Consolidating deliveries and invoicing across sites under one account.
- Stock management: Setting reorder points helps you avoid urgent-delivery charges.
For a full guide to planning deliveries around production, see our article on manufacturing fuel reliability.
Industrial heating fuel FAQs
These are the questions manufacturers ask us most often when choosing a heating fuel.
Can businesses use red diesel for heating?
Businesses cannot use red diesel (rebated gas oil) to heat commercial premises, as rules introduced on 1 April 2022 limit rebated gas oil for heating to non-commercial premises such as state schools and NHS hospitals. Factories and other profit-making sites must use duty-paid gas oil or a fully rebated heating fuel such as kerosene.
Can you burn kerosene in a gas oil boiler?
A gas oil boiler cannot burn kerosene correctly without adjustment, because the two fuels need different burner nozzles, pump pressures and air settings. A qualified combustion engineer can convert and recommission the burner for kerosene.
Is kerosene cheaper than gas oil for commercial heating?
Kerosene is usually cheaper than gas oil for heating commercial premises once fuel duty is included, because kerosene used for heating is fully rebated, while gas oil attracts full duty. Gas oil holds about 4% more energy per litre, so the fairest comparison is cost per useful kWh, based on delivered price and burner efficiency.
Get a quote for your industrial heating fuel with Your NRG
To get a quote, send us your burner type, annual volume and tank capacity, and our commercial team will come back with a price for the fuel that fits your plant. We supply kerosene and gas oil to manufacturing sites from more than 20 depots across England and Scotland.
- 4.8-star rating on Feefo
- ISO 9001 and ISO 14001 certified, and a member of UKIFDA (see our accreditations)
- Commercial quotes based on your volume, location and delivery pattern
