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Renewables Must Now Pay Climate Change Levy

July 8, 2015

By Paul Homewood  

 

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http://www.clickgreen.org.uk/news/national-news/126251-renewable-energy-sector-reacts-with-fury-budget-plans-to-axe-levy-support.html

 

It seems the greenies are all up in arms that the Chancellor has removed the exemption from the Climate Change Levy for renewable energy providers.

The levy was originally introduced in 2001 as a charge to businesses on their electricity bills, intended to incentivise them to save energy, rather than encourage renewable provision.

 

Unsurprisingly, the subsidy sharks in the renewable sector are furious that they won’t be able to make quite as much money:

 

The UK’s renewable energy sector has attacked Government plans to change the rules governing the Climate Change Levy – a measure which was originally designed to promote the generation of clean energy.
RenewableUK, the trade association representing the wind, wave and tidal energy industries, strongly criticised the Chancellor’s announcement in his budget speech that he is retrospectively removing the exemption for green energy.
RenewableUK’s Director of Policy, Dr Gordon Edge, said: “The Chancellor’s announcement that renewable electricity will no longer be exempt from the Climate Change Levy is a punitive measure for the clean energy sector. Until now, Levy Exemption Certificates (LECs) generated as a result of the CCL have provided vital financial support for renewable energy producers.
“The Chancellor says the removal of the exemption will earn the Treasury £450 million in 2015/16, rising to £910 million in 2020/21.
“We’re suddenly looking at a substantial amount of lost income for clean energy companies which was totally unexpected. For example, Levy Exemption Certificates account for just over 6% of onshore wind generators’ revenues
.

http://www.clickgreen.org.uk/news/national-news/126251-renewable-energy-sector-reacts-with-fury-budget-plans-to-axe-levy-support.html

 

All of the other money spinning schemes are, of course, still in place, but that does not satisfy the left wingers at the Guardian!

 

 

 

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http://www.theguardian.com/environment/2015/jul/08/clean-energy-switch-uk-falling-behind

 

Unfortunately, the Guardian’s logic totally falls apart in the very first paragraph:

 

The government says that it wants a sustainable, secure and affordable energy system. Unfortunately, week-by-week since the general election, and now with the budget, it has made statements or policy changes that take us further away from that goal, and put us increasingly out of step with the rest of the world.

 

Building thousands of heavily subsidised wind turbines certainly is not secure or affordable, and it could be argued not sustainable either.

 

 

Meanwhile, Drax are unhappy that they will only now get £105/MWh, twice the going rate, for their biomass plants, and are missing out on their icing on the cake:

 

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http://www.bloomberg.com/news/articles/2015-07-08/drax-shares-plunge-after-u-k-scraps-climate-levy-exemption

 

Drax Group Plc, the utility converting the biggest U.K. coal station to burning wood pellets, plunged to its lowest ever after the government said clean power will have to start paying a climate-change tax.

The stock tumbled 28 percent in London to the lowest since it started trading in 2005. Chancellor of the Exchequer George Osborne said renewable energy that includes power from biomass will no longer be exempt from the Climate Change Levy. He made the comments in his budget statement in Parliament on Wednesday.

Drax draws government support for its plants, whose wood pellets are considered a renewable fuel. The change may cut revenue for clean-energy generators by as much as 5 percent, said John Musk, an analyst at RBC Capital Markets LLC. Goldman Sachs Group Inc. estimates Drax earnings may drop as much as 50 million pounds ($77 million) before interest and tax.

“When you float that loss of 5 percent revenues down to the bottom line, it multiplies up, and you’re looking at something that is a significant hit to valuation,” Musk said.

 

 

 

If such a minor change can make so much difference to the bottom line, it rather goes to show that renewables are so hopelessly uncompetitive.

21 Comments
  1. July 8, 2015 7:41 pm

    One word, GOOD!

  2. Joe Public permalink
    July 8, 2015 7:49 pm

    The Climate Change Levy is simply a ‘hidden’ tax.

    Every single business uses electricity, and they simply pass that increased-overhead on to their customers in the form of higher prices for goods & services.

  3. July 8, 2015 7:51 pm

    Clearly the Tories understood the green scam even better than they let on pre-election. Presumably this will apply to wind turbines too.

  4. John Palmer permalink
    July 8, 2015 8:29 pm

    And about time!
    What really p****es me off about this lot is their unshakeable belief that these subsidies (in this case not a subsidy but monies hijacked by the renewable troughers) are theirs ‘by right’ and that the voters who very clearly gave their decision in May have no right to turn off the supply of taxpayers money.
    Just wait for the BBC and others this weekend to report the inevitable BS that the (elected) Government is risking ‘destroying the planet for our grandchildren’ by not following their righteous path to a green armageddon.
    There must be some sort of Climate-Fest later this year???

  5. July 8, 2015 8:56 pm

    The climate change levy was applied to nuclear power stations, the ‘cleanest’ of all generators. The renewable industry never complained about that.

    Catherine Mitchell of Exeter University has form for spouting nonsense about energy – a subject about which she has no qualifications..

    • AndyG55 permalink
      July 8, 2015 9:53 pm

      Exeter Uni is a hotbed of climate troughers !

  6. July 8, 2015 9:50 pm

    Delighted to see your item of Drax, Paul. goodness knows how many forests would have been felled to fuel that wood burning leviathan. And I thought the greenies wanted to save the forests . . . !

    • July 8, 2015 10:05 pm

      Apparently fine for DRAX to lie about scrap wood while clearcutting US Carolineas. A greater true environmental sin cannot be imagined.
      Selective cutting of managed woodlots (in staggered blocks) is OK. Anything else, absolutely not unless some fast growing pine plantation, where the trees are a crop longer maturing than cotton, and wildlife does not matter. I speak as an ardent environmentalist, and farmer owner of a Wisconsin dairy farm on which we have three wood plots of selective cut (one plot each ten years, thirty year restoration).

  7. July 8, 2015 10:32 pm

    john palmer is no doubt correct in his predictions of the media reactions, especially with paris approaching.

    It was always lunacy to convert a first rate power station like Drax from a premium fuel to a low grade fuel in terms of output and efficiency. Will the Tories take the greenies on properly now? I doubt it , but hope so.

  8. Graeme No.3 permalink
    July 8, 2015 10:45 pm

    Perhaps Drax could convert those units back to cheap imported coal? They could claim, quite truthfully, that their CO2 emissions will drop and that they are saving forests.

    • AndyG55 permalink
      July 8, 2015 10:55 pm

      Well said, Graeme. 🙂

      But don’t give them ideas. !

  9. AndyG55 permalink
    July 8, 2015 11:49 pm

    Quite a bit of subsidy money involved ! $39 BILLION !

    This is gunna hurt the scammers big time ! 🙂

    http://utilityweek.co.uk/news/summer-budget-treasury-delivers-39bn-body-blow-to-renewables-sector/1149402#

    • July 9, 2015 6:08 am

      It seems to be only £3.9billion.

      • AndyG55 permalink
        July 9, 2015 10:13 am

        Yep..$3.9B

        pocket money to the taxpayer!!

  10. July 9, 2015 8:23 am

    Reblogged this on windfarmaction and commented:
    Well, this was a ‘subsidy’ that they kept very quiet about.

  11. July 9, 2015 9:14 am

    As usual The Guardian ignores the fact that wind power is only available about 20-40% of the time on average, and can dwindle to near zero on some days.

    What use is that as a primary source of power to industrialised countries, or any countries?

    • cheshirered permalink
      July 9, 2015 12:30 pm

      Of course they ignore anything inconvenient, but since when did the Guardian deal in anything other than propaganda?

  12. johnmarshall permalink
    July 9, 2015 10:29 am

    Cannot come soon enough!

    I have had arguments through emails with that thick COE Woman from Drax Plc. I accused her of subsidy milking and environmental hooliganism which she, obviously, refused to accept as true. Accusations of the decimation of east coast US forests were denied on the grounds that Drax only required 7.5million tonnes of pellete made from forest trimmings. My reply, look at the pictures of the forests after trimming.

    Some forest, some trimmings.

  13. July 9, 2015 11:42 am

    Take note of who wrote the Guardian article, not one of their bonkers staffers, but one of the UK’s bonkers academics: Catherine Mitchel, Professor of Energy Policy at Exeter University.

    The naive might think that a Prof of Energy Policy would be balanced and impartial, knowing the pros and cons of all energy sources. Not so with this lady, she is a climate change zombie in disguise, a zealot for renewable energy.

    The BBC has a habit of interviewing her as an impartial expert.

    • tom0mason permalink
      July 9, 2015 10:27 pm

      Exeter University no more need be said.

  14. It doesn't add up... permalink
    July 9, 2015 10:50 pm

    The really smart move will be to abolish the Climate Change Levy altogether, while simultaneously lowering renewables subsidies. Result: lower electricity bills all round, consumers save, affording a basic living becomes easier.

    In the short term it would therefore make sense to increase the levy, so the lowering of bills when it is cancelled is even greater: at that point, a small increase in net margin can be offered to sweeten the pill.

    Disappointingly there appears to have been no attempt to correct the mistake of the Carbon Floor Price, so we will continue to see CCGT and coal fired power station closures.

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