RenewableUK: Tax Freeze on Carbon Emissions “Missed Opportunity”

The trade association representing the wind, wave and tidal energy industries, RenewableUK, has expressed disappointment at the Chancellor’s announcement that he will freeze a tax on carbon emissions created by fossil fuels – the Carbon Price Support – at its 2016/17 level for the rest of the decade.

The Chancellor claimed that investment in new power sources, including renewables, would not be impacted as a result. At the very least, this freeze will remove any contingency in the support budget for renewables, increasing risk for investors.

RenewableUK’s Director of Policy, Dr Gordon Edge, said: “Although it was good to see the Chancellor specifically naming renewables as a key part of the plan to cut our energy costs, the freeze in the Carbon Price Support level will chill the mood of some investors in clean energy projects. The Chancellor introduced the CPS to stimulate green growth by penalising fossil fuel polluters. Now some of that growth is at risk, despite the Chancellor’s assertion today that there will be no reduction in investment in renewable energy.

“By freezing the CPS there will inevitably be a squeeze on the pot of money set aside to support renewables – the Levy Control Framework. This will limit the Government’s room for manoeuvre as it strives to meet its 2020 renewable energy target.

“The UK’s wind, wave and tidal energy industries need stability, certainty and confidence. That’s why the announcement on the CPS sends an unwelcome message to our sector, and represents a missed opportunity for some of the UK’s most forward-looking new industries – turnover in the UK’s wind, wave and tidal energy sector reached £8.1 billion in 2013, employing more than 18,000 people”.

The Chancellor’s speech came on the day that the Scottish Energy Minister, Fergus Ewing, announced that consent has been granted for two offshore wind farm projects, Moray and Beatrice, in the Moray Firth.

Dr Edge commented: “This is a great step forward, as these two major projects, with a combined capacity of 1,866MW (megawatts), have the potential to generate clean electricity for more than 1,200,000 homes. But to ensure projects like this succeed, the Government must ensure there’s enough capacity and flexibility in the Levy Control Framework to secure financial support for them”.

“The Government has to be very careful not to spook investors by making sudden policy changes, and above all it shouldn’t be rowing back on previous commitments to support low-carbon generation. With the right level of support so that we can bring forward the low-carbon investment needed for the UK”.

Press release, March 20, 2014