George Osborne has announced that the government is to remove the exemption of green power under the Climate Change Levy (CCL).
Under the previous arrangement businesses could purchase Levy Exemption Certificates from renewable generators meaning they would not have to pay the Climate Change Levy, a tax applied on the energy delivered to non-domestic energy users. In turn, renewable generators would receive this payment as an added source of revenue for their electricity (£5/MWh).
According to RenewableUK this equates to the loss of 6% of onshore wind generators’ revenues. The loss to the green power industry as whole is estimated to be £910million by 2020.
On announcing the removal of the exemption, George Osborne said “we will remove the out-dated Climate Change Levy exemption for renewable electricity that has seen taxpayer money benefitting electricity generation abroad.”
In recent times a growing proportion of Levy Exemption Certificates have been bought from abroad, representing a loss of tax revenue the government, which is one of the reasons cited by the Chancellor for scrapping the exemption.