The Summer Budget, which was announced yesterday, will cost the anaerobic digestion (AD) sector £11 million.
That’s according to the Anaerobic Digestion and Bioresources Association (ADBA), which claims the Climate Change Levy (CCL) exemption for renewables will reduce revenue by around £5/MWh.
For the 2.2TWh of electricity generated by the AD industry, it will cost around £11 million every year in total, impacting investor and operator confidence, it adds.
The Budget document, which outlines how renewable electricity will no longer be exempt from the CCL, states: “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 adds two thirds of CCL revenue stays in the UK, supporting home-grown clean energy.
Charlotte Morton, ADBA’s Chief Executive said: “The claim that this change is to ‘correct an imbalance’ is misleading – only a third of the climate change levy goes to renewable electricity generated overseas.”
She added the rest of the levy is currently spent supporting the UK’s renewable electricity market at around £5/MWh, which developers took into account when putting their business models together.
She went on:”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.
“This announcement comes as the industry is already facing uncertainty on a number of fronts given the imminent Feed-in Tariff review due and absence of confirmation that the Renewable Heat Initiative will be extended beyond March 2016.
“The UK needs renewable energy to keep the lights on and meet climate change targets.”
Yesterday Renewable Energy Foundation Director John Constable told ELN the most important element of the budget was the removal of the Climate Change Levy (CCL) exemption for renewable electricity.