Budget 2015: Key climate and energy announcements
Source: Carbon Brief
George Osborne is to abolish the coalition’s green tax target and customers face paying £1.5billion more through their bills to subsidise wind farms, solar panels and biomas plants, following yesterday’s Emergency Budget (July 8 2015).
Chancellor George Osborne’s summer budget was widely expected to mention the levy control framework (LCF), which limits subsidies for low-carbon energy schemes. Well-placed sources and heavily-briefed political correspondents at the Telegraph and Financial Times had hinted at a review of the LCF budget.
Instead, Osborne announced tax changes that will cost renewable energy generators £910m in 2020/21, a review of other green taxes faced by businesses and an end to the commitment to increase environmental taxes’ share of government revenue.
Details of further departmental spending cuts will be announced in a spending review this autumn. Carbon Brief runs through today’s key announcements on climate and energy.
Support for clean energy
The biggest financial impact for the energy sector in today’s budget stems from changes to the Climate Change Levy, a tax on energy use paid by businesses. Electricity from renewable sources had been exempt, resulting in effective support of £5 per megawatt hour of output.
Osborne plans to remove the renewables exemption. Analysts say this could wipe 5-6% off the income for onshore windfarms and make some planned projects unviable. Shares in Drax, the coal- and biomass-fuelled power station in Yorkshire, had fallen by a quarter this afternoon.
The Treasury says ending the levy exemption will generate £490m during 2015/16, rising to £910m in 2020/21. Contract rules for some schemes mean they may be able to claim compensation if a change in the law puts them at a disadvantage, so the government may face legal action.
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