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Landfill tax escalator extended until 2014 - UPDATE

Chancellor Alistair Darling has announced that the landfill tax escalator will be extended for another year until 2014 and will continue to increase by £8 per tonne in this years Budget.

This will mean that landfill tax will be £56 in 2011, £64 in 2012, £72 in 2013, and £80 in 2014. The Government aims to reduce the UKs dependence on landfill by encouraging further investment in alternative waste management options to landfill, such as anaerobic digestion technology.

Darling also announced that there will be a freeze in the lower rate of landfill tax in 2011-12. The Government confirmed that the standard landfill tax rate will not fall below £80 per tonne in future, to provide certainty for business investment. The Budget 2010 report, published after the Chancellor had spoken, stated: The increase in the standard rate will divert an additional 600,000 tonnes of waste, and result in carbon savings.

It was also confirmed that the lists of wastes that qualify for the lower rate of landfill tax will remain broadly the same as present. The Government stated that it will publish a new set of qualifying criteria later this year to provide a clearer environmental rationale for the lower rating of wastes.

The Budget also maintains that the Government intends to grandfather a minimum level of Renewables Obligation support for biomass installations at the point of accreditation, subject to consultation.

This follows months of negotiations between the Department for Energy and Climate Change and the renewable energy industry to ensure that the grandfathering principle is applied to biomass technologies, such as energy from waste and anaerobic digestion, in the same way it is applied to other forms of renewable energy.

Currently the grandfathering principle, which protects capital investments in relation to renewable energy, is not guaranteed for biomass facilities meaning that investors have been reluctant to invest in such technologies in case the ROC banding down and the facilities are no longer economically viable.

The Renewable Energy Association pointed this out to DECC at the end of last year and have been working with them on finding the best means of safeguarding baseline income streams under renewable obligation, while also taking into account future potential movements in fuel costs.

reported last week that a consultation on new grandfathering proposals was expected by the REA and todays budget has now confirmed this (see MRW story).

The Chancellor also confirmed that the Government will set up a Green Investment Bank with a £2 billion infrastructure fund that will help fund low carbon projects including waste projects. Although initial priorities for this fund will be offshore wind electricity generating projects, the Budget does allow for the new bank to fund other sustainable energy schemes. Half of the banks funds will come from Government asset sales and the other half from the private sector.

Darling said that the UKs infrastructure would need improving and modernise our energy supplies.

He added: Again our competitors are not standing still China is building a new power station every week, to meet its growing needs.

Commenting on the Green Investment Bank proposals, Aldersgate Group chairman Peter
Young said: "The initial £2 billion of equity is a good start but must be rapidly scaled up over the next Parliament. The total low carbon investment needed by 2020 is at least £250 billion, leading to more secure jobs and a more prosperous future."

There was no mention of an extension to the boiler scrappage scheme but the Chancellor said the car scrappage scheme, which ends on March 31, had helped to protect jobs and increase sales by around 30%.

It was also confirmed in the Budget that the landfill communities fund will increase in line with inflation to £74 million in 2010-11.

Darling also commented that at the heart of the budget will be a £2.5bn one-off growth package to help small business, promote innovation, and invest in national infrastructure and key skills.


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