UK: Renewables associations slam Summer Budget announcement

George Osborne
George Osborne

Following the decision of the Chancellor George Osborne to remove the climate change exemption for renewable power announced in the Summer Budget, a number of renewable energy associations have raised concerns about the potential negative effects this could have on the clean energy sector.

Under the Climate Change Levy (CCL), introduced by the UK government in 2001 as a measure to cut greenhouse gas emissions, the power produced from renewable sources was exempt from climate-change tax.

The measure was introduced to promote the usage of energy produced from low carbon technologies, and renewable sources.

Summer Budget, delivered yesterday, July 8, announced the removal of the Climate Change Levy exemption for renewable electricity.

“This change will correct an imbalance in the tax system by preventing taxpayers’ money benefitting renewable electricity generated overseas, and by helping ensure support for low carbon generation provides better value for money for UK taxpayers,” it is stated in the Summer Budget.

UK Government will remove the tax exemption for renewably sourced electricity from August 1, 2015. According to the Budget, there will be a transitional period for suppliers, from 1 August 2015, to claim the CCL exemption on any renewable electricity that was generated before that date.

During his speech in the House of Commons, George Osborne, said: “Now we have a long term framework for investment in renewable energy in place, we will remove the out-dated Climate Change Levy exemption for renewable electricity that has seen taxpayer money benefiting electricity generation abroad.”

Renewables associations in the UK, including Renewable Energy Association (REA) and RenewableUK, have criticized Chancellor’s announcement about changing the rules governing the Climate Change Levy .

RenewableUK’s Director of Policy, Gordon Edge, stated that this announcement is ‘another example of this Government’s unfair, illogical and obsessive attacks on renewables.’

Edge said: “The Chancellor’s announcement that renewable electricity will no longer be exempt from the Climate Change Levy is a punitive measure for the clean energy sector. Until now, Levy Exemption Certificates (LECs) generated as a result of the CCL have provided vital financial support for renewable energy producers.

“The Chancellor says the removal of the exemption will earn the Treasury £450 million in 2015/16, rising to £910 million in 2020/21. We’re suddenly looking at a substantial amount of lost income for clean energy companies which were totally unexpected.”

REA said that it will be calling on the Treasury to rethink this proposal, and has urged the Chancellor to work with the industry to address the problem of foreign generators without hindering the UK’s ability to meet the country’s climate targets, REA’s press release reads.

Chief Executive of the Renewable Energy Association, Nina Skorupska, said: “The removal of the Climate Change Levy exemption for renewables will have a significant effect for our members immediately, and will undermine investor confidence by changing the stable market conditions needed for financing and business planning.

“If the intention was to remove the anomaly of international firms benefiting from the CCL exemption, this is a disproportionate action that now turns a measure designed to encourage low-carbon electricity, into just an electricity tax for business.”

RenewableUK is the UK’s renewable energy trade association, specialising in onshore wind, offshore wind and wave and tidal energy.

REA represents renewable energy producers and promotes the use of all forms of renewable energy in the UK across power, heat, transport and renewable gas. It has 750 members.

Image: HM Treasury

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