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Budget policy switch will hit AD sector for £11m

The Anaerobic Digestion and Bioresources Association (ADBA) has said that Budget changes to the climate change levy (CCL) will cost the AD industry £11m.

An exemption from the CCL for renewably sourced electricity is to be removed, Chancellor George Osborne announced, with a transitional period for suppliers from 1 August to claim exemption on any renewable electricity generated before that date.

ADBA says the loss of the exemption will reduce revenue by around £5 per MWh. For the 2.2TWh of electricity generated by the AD industry, this will cost around £11m a year, affecting investor and operator confidence. 

We are deeply disappointed that the industry was not consulted on this decision

Charlotte Morton, ADBA

It quotes part of the documentation around renewable electricity: “This change will correct an imbalance in the tax system by preventing taxpayers’ money benefitting renewable electricity generated overseas, and helping to ensure support for low carbon generation provides better value for money for UK taxpayers.” 

But ADBA says a Budget policy document reveals that two-thirds of CCL revenue stays in the UK.

Charlotte Morton ADBA

Chief executive Charlotte Morton, left, said the justification for the loss of exemption was misleading. 

“The rest of the CCL is currently spent supporting the UK’s renewable electricity market at around £5 per MWh, which developers took into account when putting their business models together.

“This announcement comes as the industry is already facing uncertainty on a number of fronts given the imminent Feed-in Tariff review due and absence of confirmation that the Renewable Heat Initiative will be extended beyond March 2016. 

“We are deeply disappointed that the industry was not consulted on this decision and remain concerned about the Government’s real support for the green economy.”

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