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UK renewable energy exports at risk from EU carbon tax

UK wind and solar farms may face carbon fees when exporting power to Europe from 2026, potentially impacting revenues and power prices unless an agreement is reached

British wind and solar farms exporting electricity to continental Europe could be subject to CO2 fees from 2026 due to the EU’s carbon border tax, despite these energy sources not producing any emissions.

This issue stems from a clause in the carbon levy law, which could affect the revenues of UK renewable energy projects and contribute to already high power prices in the EU.

Industry experts also warn that this measure might lead to higher emissions.

The Carbon Border Adjustment Mechanism will levy a CO2 emissions fee on imports of certain goods, including electricity, to the EU.

This fee applies unless the exporting country has equivalent CO2 pricing policies.

The fee for power imports would be based on a default value, reflecting average and historic emissions from power generation.

The British energy sector argues that this approach unfairly penalises renewable energy sources.

Adam Berman, Deputy Director of trade association Energy UK told Reuters: “It’s a problem on both sides.

“(It) disincentivises clean power in the UK at the moment in which we’re trying to ramp up provision of clean power, and it’s going to increase (power) prices in northern Europe.”

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