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AD industry hit by £11 million cut

As detail emerges after the Chancellor of the Exchequer, Rt Hon George Osborne MP, announced the summer Budget 2015 earlier today, ADBA has calculated that the Budget’s small print includes an £11m hit on the anaerobic digestion sector alone.

The removal of the Climate Change Levy exemption for renewables will reduce revenue by around £5 per MWh. For the 2.2TWh of electricity generated by the AD industry this will cost around £11 million per year, impacting investor and operator confidence.

The Budget’s smallprint outlines how renewable electricity will no longer be exempt from the climate change levy; stating that:

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.

In reality, the budget documents reveal that two thirds of CCL revenue stays in the UK, supporting home-grown clean energy.

ADBA’s Chief Executive, Charlotte Morton, commented:

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.

The rest of the levy is currently spent supporting the UK’s renewable electricity market at around £5 per MWh, which developers took into account when putting their business models together. 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.

We are deeply disappointed that the industry was not consulted on this decision and remain concerned about the government’s real support for the green economy.

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