UK Government scraps climate change levy

• 8 years ago (2015-07-09)
• David Flin

Europe 1061

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George Osborne, UK Chancellor of the Exchequer, has confirmed he will remove the climate change levy in his first budget since the Conservative party won the UK general election in May. He described the climate change levy as “outdated”.

Osborne said that he will remove the exemption that generators of renewable electricity have had from the climate change levy. Currently, tax is not paid on renewable electricity supplied to businesses and the public sector under renewable source contracts. He said: “Now we have a long-term framework for investment in renewable energy in place, we will remove the out-dated Climate Change exemption for renewable electricity that has seen taxpayer money benefitting electricity generation abroad. 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.”

The UK Government said in a statement: “More effective policies have been put in place to support renewable electricity generation. These target support directly at renewable generators, whilst the climate change levy exemption seeks to support renewable generation indirectly through stimulating demand.”

From August 1, the government will remove the climate change levy exemption for renewable-sourced electricity, but there will be a transitional period for suppliers from August 1, to claim the climate change levy exemption on any renewable electricity that was generated before that date.

The UK HM Revenue and Customs said that removal of the climate change exemption would save the UK Government approximately £3.9 billion over the next five years, and that more energy that does not contribute to climate change targets will be produced.