Ministers are being urged to end a “tax loophole” which allows refrigerated lorries to use cheaper ‘red diesel’, a perk Liberal Democrats say gives supermarkets “a perverse incentive” not to clean up their fleets.

Commonly used in agricultural vehicles, red diesel is taxed at just 11.14 pence per litre compared to 57.95 pence per litre for standard diesel.

While it’s illegal to drive a vehicle powered by the cheaper fuel on the public highways, some supermarkets and other fleet operators use it to run unregulated secondary engines which power their refrigeration units.

Caroline Pidgeon AM, the Liberal Democrat London spokesperson and a member of the London Assembly, and recently elected Liberal Democrat London MPs Tom Brake, Vince Cable and Ed Davey want the Treasury to remove this pricing perk.

In a joint submission to the Treasury’s consultation on the taxation of red diesel, the group say continuing to charge less for for the fuel will undermine efforts to clean up London’s air quality by removing any incentive to move to cleaner fuel types.

Ms Pidgeon said: “Red diesel was never intended to support major corporations operating on London’s roads.

“We need to end this loophole as quickly as possible. By hardly taxing diesel used for refrigeration units we provide a perverse incentive for supermarkets and other companies to carry on using diesel, when instead they should be adopting alternative cleaner technologies.”

Tom Brake, MP for Carshalton and Wallington said: “We need to support the adoption of new and cleaner technology.

“The current tax arrangements do the exact opposite and actually encourage the use of dirty diesel refrigeration engines continuing to exist on supermarket lorries.”

Sir Ed Davey, MP for Kingston and Surbiton, and the Secretary of State for Energy and Climate Change during the coalition government, added: “Last year the world was scandalised by the revelation that VW and other manufacturers had installed ‘defeat devices’ on diesel cars to cheat US emission standards.

“However transport refrigeration units are far worse – emitting up to 93 times more NOx and 165 times more PM than the standards for a Euro 6 diesel car.”

“The case for this tax change is overwhelming.”