Budget to impact renewables
13 Jul 2015
Figures published by the Anaerobic Digestion and Bioresources Association (ADBA) suggest the anaerobic digestion (AD) sector could be hit by £11 million worth of cuts.
Chancellor George Osborne presented his summer Budget to Parliament last week, but drew a mixed reaction from industry experts.
While the offshore industry welcomed plans to broaden the Investment Allowance, the Chancellor’s lack of clarity on reversing skills shortages caused the most unrest.
We are deeply disappointed that the industry was not consulted on this decision
ADBA chief executive Charlotte Morton
However, on closer inspection of the Budget it has emerged that Osborne’s plan to remove the climate change levy (CCL) exemption for renewables will reduce AD sector revenue by around £5 per MWh.
According to ADBA, for the 2.2TWh of electricity generated by the AD industry this will cost around £11 million per year, impacting investor and operator confidence.
The Budget’s small print states that: “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.”
ADBA chief executive Charlotte Morton said information within the Budget is misleading.
“Only a third of the climate change levy goes to renewable electricity generated overseas,” Morton said.
“The rest of the levy is currently spent supporting the UK’s renewable electricity market at around £5 per MWh, which developers took into account when putting their business models together,” she said.
“Without the exemption for renewable sources, the AD industry will lose £11 million in revenue each year – hurting existing operators and putting further investment at risk.”
Morton said the announcement comes at a time when the renewables sector is facing uncertainty on “a number of fronts”.
“The UK needs renewable energy to keep the lights on and meet climate change targets,” Morton said.
“We are deeply disappointed that the industry was not consulted on this decision and remain concerned about the government’s real support for the green economy.”
