After the budget was released green energy companies could only sit back and reel in shock as the Chancellor slashed the renewable subsidies and also removed the Climate Change Levy (CCL) exemption for renewable electricity schemes.
Gordon Edge, RenewableUK’s director of policy, said that until now, Levy Exemption Certificates generated as a result of the CCL had provided vital financial support for renewable energy producers. “The government had already announced an end to future financial support for onshore wind – even though it’s the most cost-effective form of clean energy we have. Now they’re imposing retrospective cuts on projects already up and running across the entire clean energy sector. Yet again the government is moving the goalposts, pushing some marginal projects from profit into loss. It’s another example of this government’s unfair, illogical and obsessive attacks on renewables”.
Osborne has said that the exemption was "out-dated" and had "seen taxpayer money benefitting electricity generation abroad". Osborne went on to announce tax changes that will cost renewable energy generators £910m in 2020/21. Delivering his emergency budget, Osborne said change would “correct an imbalance in the tax system by preventing taxpayers’ money benefitting renewable electricity generated overseas” – The length of the transaction period will be discussed over the next few months. The move will earn the Treasury £450m in 2015-2016 and this will rise again to £910m in 2020-2021.
Investment trust broker Numis Securities says 'The government has removed the CCL because it represented an indirect support to renewable energy generation, and more effective support mechanisms targeted directly at renewable generators have been introduced.
'In addition, one-third of the value of the CCL would have gone to supporting renewable electricity generated overseas,' says Numis.
Caroline Lucas the Green Party MP has described the budget as a “serious blow for the fight against climate change - this cruel and counterproductive budget is dire news for people in Britain and a serious blow to the Government’s already stained record on climate change.”
"There is an enormous climate shaped hole in this budget.”
“Ministers know that climate change presents a huge threat to our economy and national security - not just to public health and our environment. Yet George Osborne has refused to change direction and, in axing the climate-change levy exemption for renewable electricity and committing to further funding for road building, he’s putting progress on climate change in jeopardy. We’ve seen yet another example of reckless short-term policy making that prioritises the profits of polluters over the public interest in a safe and habitable climate”
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