14th JULY 2015

GREENTUESDAY• Data Management• Legislation• Compliance

energyquote.comA Unique Perspective

UK: July 2015 Budget: Chancellor removes Climate change levy (CCL) exemption for electricity from renewable sourcesOn 8 July 2015, the Chancellor of the Exchequer, George Osborne, delivered the July 2015 Budget. Aimed at developing a simple, fair and more efficient energy environment for business, it appears to lack credible long-term support for renewable energy generation, while at the same time boosting road improvements and fossil fuel extraction.

Review of the business energy efficiency tax landscapeThe government has announced that it will review the business energy efficiency tax landscape with a view to develop a simple, fair and more efficient energy environment for business that minimises administrative burdens and improves incentives for business to invest and grow.

The Government has stated that it will launch a formal public consultation in autumn 2015.

The autumn 2015 review will cover the:

• Climate change levy (CCL)

• CRC Energy Efficiency Scheme (CRC)

It will also look at how these schemes interact with other energy efficiency policies and regulations that apply to businesses. Presumably the review could involve looking at the overlaps with the following other energy efficiency related schemes and obligations:

• The Energy Savings Opportunity Scheme (ESOS)

• The duty to report on greenhouse gas (GHG) emissions as part of a company’s annual report under the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410)

• EU Emissions Trading Scheme (EU ETS)

• The Levy Control Framework (LCF).

A Unique Perspective | Green Tuesday | 14.07.2015

The July 2015 Budget appears to lack credible long-term support for renewable energy generation

The government has announced that it will review the business energy efficiency tax landscape

It will also look at how these schemes interact with other energy efficiency policies and regulations that apply to businesses

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A Unique Perspective | Green Tuesday | 14.07.2015

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Climate change levy (CCL) exemption for electricity from renewable sources removedThe government has announced that it will remove the climate change levy (CCL) exemption for electricity from renewable sources, from 1 August 2015.

There will be a transitional period during which electricity suppliers will be able to continue to exempt electricity from renewable sources generated before that date. This will be permitted if they hold sufficient renewable levy exemption certificates (LECs) that relate to that electricity and use them against supplies they make to eligible consumers.

The length of this transition period will be discussed with regulators and affected businesses during summer and autumn 2015.

The government’s reason for removing the exemption is to ensure UK taxpayers are not subsidising overseas renewable energy generators whose electricity does not contribute to UK climate change and renewable energy targets, and who often already receive subsidies from their own country.

Since the exemption was introduced, more effective policies have been put in place to support renewable electricity generation. These target support directly at renewable generators, whilst the CCL exemption seeks to support renewable generation indirectly through stimulating demand.

Next steps: Likely impact of removing the exemption on business energy billsAs the business energy market is highly competitive, removing the exemption is not expected to significantly increase business energy bills. Energy intensive industries can already exempt themselves from 90% of CCL costs by signing Climate Change Agreements.

Renewable generators overseas who export electricity to the UK will cease to benefit from the exemption.

Renewable generators in the UK could be impacted by the change in the short-term. However the value they receive from the exemption is expected to be negligible by the early 2020s. Any short-term loss will be minimal compared with the support expected to be allocated to renewable generators in 2015-16 alone.

The government has announced that it will remove the climate change levy (CCL) exemption for electricity from renewable sources, from 1 August 2015

Since the exemption was introduced, more effective policies have been put in place to support renewable electricity generation

Renewable generators overseas who export electricity to the UK will cease to benefit from the exemption

A Unique Perspective | Green Tuesday | 14.07.2015

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EU: Austria challenges European Commission’s state aid approval of UK’s Hinkley Point nuclear power plantOn 29 June 2015, the Contracts for Difference (Standard Terms) (Amendment) Regulations 2015 were published. These implement certain policy decisions taken by the government following a consultation in March 2015. The Regulations come into force on 20 July 2015.

The Regulations amend the Contracts for Difference (Standard Terms) Regulations 2014 to enable the Secretary of State to issue standard terms which comply with the European Commission’s requirement (as a condition of state aid approval) that Contracts for Difference (CFDs) signed from 1 January 2016 should not permit payments to be made to generators during periods of negative electricity prices. It includes a definition of “negative price periods” for these purposes.

In addition, the Regulations will enable the Secretary of State to issue a replacement CFD standard terms notice to the CFD counterparty where this is required to correct errors in the standard terms notice or to update a reference to a new version of the standard terms. A replacement CFD standard terms notice can only be issued where 20 working days remain before the commencement date specified in the allocation round notice.

On 29 June 2015, the Contracts for Difference (Standard Terms) (Amendment) Regulations 2015 were published

A replacement CFD standard terms notice can only be issued where 20 working days remain before the commencement date specified in the allocation round notice

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