The renewables sector is wiping its collective brow after ominous reports in the mainstream media that suggested George Osborne was readying a review of subsidies proved false.
However – as has become a tradition with Osborne’s budgets – there were still measures which the cleantech community has objected to. Below is a roundup of the industry’s thoughts on the Conservative’s first budget of this parliament.
Nick Molho, Executive Director of the Aldersgate Group
The government’s understandable focus on tackling the annual budget deficit and the national debt shouldn’t come at the expense of failing to support those sectors of the economy that are key to the UK’s long-term growth and competitiveness prospects. With the global low carbon goods and services sector already worth US$5.5 trillion and international momentum building to accelerate cuts in carbon emissions, the UK economy can’t afford to drop out of the low carbon race.
Dr Nina Skorupska, chief executive, Renewable Energy Association:
The removal of the Climate Change Levy exemption for renewables will have a significant effect for our members immediately, and will undermine investor confidence by changing the stable market conditions needed for financing and business planning.
If the intention was to remove the anomaly of international firms benefiting from the CCL exemption, this is a disproportionate action that now turns a measure designed to encourage low-carbon electricity, into just an electricity tax for business.”
David Powell, senior economics campaigner, Friends of the Earth:
The next five years are crucial for breaking our dependency on climate-wrecking gas, coal and oil and dirty transport – so it’s appalling that the Chancellor has only added fossil fuel to the fire.
Mr Osborne’s confirmation of huge tax breaks to North Sea gas and oil, and continuing support for deeply unpopular fracking, is particularly reckless as the world prepares for critical climate talks this December.
Money raised from taxing cars shouldn't be spent on yet more roads, which will simply encourage more traffic. The Chancellor should boost public transport instead, and make our cities better for walking and cycling to help stop air pollution claiming lives.
Ronan O'Regan, director, PwC energy and utilities
The removal of the Climate Change Levy exemption will reduce the level of support for renewable projects. CCL is paid by business and public sector customers but can be offset by a Levy Exempt Certificate (LEC) earned by renewable energy projects. This will prevent non – UK renewable projects earning earning LEC revenue from selling their renewable energy in the UK. It will also impact existing UK renewable energy generators reducing their revenues today (5% for an onshore wind project), although the value of this revenue stream was expected to reduce over time as the market becomes oversupplied with LECs.
Catherine Mitchell, professor of Energy Policy, University of Exeter
The government says that it wants a sustainable, secure and affordable energy system, but recent rhetoric and policy changes are taking us further away from that goal.
The ending of subsidies for onshore wind farms, our cheapest low-carbon electricity resource, the failure to exploit the potential of energy efficiency, the removal of the Climate Change Levy exemption for renewable energy, and support for unpopular fracking and extortionately expensive nuclear power does not add up to a credible energy policy. It reduces the chances of us meeting our various legal requirements, and presents serious political risk to investors, which in itself makes energy more expensive.
Dr Gordon Edge, director of policy, RenewableUK
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.
The government had already announced an end to future financial support for onshore wind – even though it’s the most cost-effective form of clean energy we have. Now they’re imposing retrospective cuts on projects already up and running across the entire clean energy sector.
Yet again the government is moving the goalposts, pushing some marginal projects from profit into loss. It’s another example of this government’s unfair, illogical and obsessive attacks on renewables.
Caroline Lucas, Green MP
There is an enourmous climate shaped hole in this budget.
Ministers know that climate change presents a huge threat to our economy and national security – not just to public health and our environment. Yet George Osborne has refused to change direction and, in axing the climate-change levy exemption for renewable electricity and committing to further funding for road building, he’s putting progress on climate change in jeopardy . We’ve seen yet another example of reckless short-term policy making that prioritises the profits of polluters over the public interest in a safe and habitable climate.
Jerry Hamilton, business development director of renewables & energy solutions, Rexel Northern Europe
It is incredibly disappointing to see so little in the way of environmental policy in this year’s budget and, worse still, the removal of the CCL which will have a profound impact on the take up of energy-efficient measures by commercial users.
We can only hope that this truly is part of a wider plan which the government has claimed is a ‘long term framework’ for the UK energy infrastructure – and that this will be delivered quickly.
We must remember that, as a nation, we are at the risk of an impending energy crisis – with more power plants closing and replacements not happening quickly enough. Thus, we need rapid government intervention in order for us to safeguard our energy future and move a low-carbon economy along.
Cindy Pooler, marketing manager, Conergy UK
There is little to smile about with the latest budget announcement, revealing yet more tax-breaks for oil and gas and more taxes for renewables. These measures undermine more than a decade of work that has gone into educating the public and the business community on the very real need to invest in alternative energy sources.
It is imperative that the issue of sustainability remains on the government agenda in order to ensure that we don’t lose sight of the wider issues and Conergy will continue to work with partners within the industry to ensure renewable energy remains a priority.