Red diesel fuels represent savings for farmers and landowners who utilize this fuel in tractors, farm and off-road equipment. Its color means it is not for on-road use, which saves money because it doesn't have the same taxes associated with it as do regular diesel or gasoline for vehicles that use national, state and local highways. Green diesel fuel is what its name implies: a fuel created from renewable energy sources.
TL;DR (Too Long; Didn't Read)
The basic difference between red and green diesel fuel has nothing to do whatsoever with the color of the fuel; it has more to do with the use or the production of the fuel. Red diesel fuel has a dye in it to separate it from green diesel fuel, which is not green at all. Red diesel fuel is for use as a heating oil or for off-road use, which means it is not subject to federal taxes like gasoline or standard diesel fuel. Green diesel refers more to the elements that comprise the fuel, which come from plant and animal fats, renewable energy sources.
Red diesel is diesel oil that has been dyed red to identify it for a specific purpose. The dyes that are used can be detected at extremely low levels, even if the fuel has been mixed with a large percentage of un-dyed fuel. Specific laws vary from country to country, but typically red dyed diesel indicates oil that is intended for off-road use or use as a heating oil, and therefore isn't subject to the higher tax of consumer motor fuel.
Unlike red diesel, green diesel doesn't literally refer to the color of the oil. It refers to a form of production of the oil that is more economically friendly than traditional diesel oil, which is a byproduct of the petroleum refinement process. While both green diesel and biodiesel are created from plant and animal fats, green diesel uses oil refining technology to achieve a product that is more chemically similar to traditionally refined oils.
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Controlling Oil Consumption
Though red and green diesel may appear to be two very different diesel products, they are both reflective of an increased effort in recent years to control the creation and consumption of oil. Red diesel's existence is largely related to the taxation of motor oil, while green diesel is an attempt to replace a non-renewable resource with a chemically similar renewable product.