Innovative Energy Consultancy Ltd
Innovative Energy Consultancy Ltd

Budget brings key energy reforms

Chancellor George Osborne delivered the government’s Summer Budget in the Commons on 8 July, introducing a number of important reforms for the energy sector.

Most significantly, Mr Osborne confirmed the removal of the Climate Change Levy (CCL) exemption for renewable electricity.

The CCL is a tax on energy delivered to non-domestic users in the UK.  It aims to provide an incentive for these users to increase their energy efficiency and to reduce carbon emissions. 

Mr Osborne said that removing the exemption for renewable electricity would ‘correct an imbalance in the tax system by preventing taxpayers’ money benefitting renewable electricity generated overseas’.  It would also help ensure that low carbon generators provided ‘better value for money’.

A transitional period for the implementation of the change began on 1st August. Suppliers will still be able to exempt renewable power generated before that date, if they hold sufficient Levy Exemption Certificates that relate to that electricity. 

The length of the transition will be discussed with regulators and impacted businesses during the summer and autumn.

An accompany policy costings document suggested that the change would provide an additional £450m in revenues for the Exchequer in 2015-16, increasing to £910m in 2020-21.

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