Further reductions in VAT rates for wood-fuelled boilers were announced by the Government in its Pre-budget report this week.
It said microgeneration offered a long-term solution to reducing emissions and tackling fuel poverty, and the Department of Trade and Industry (DTI) will publish a microgeneration strategy by April 2006. It plans to carry out further work into transferring microgeneration to developing countries, to support international efforts to tackle climate change.
The report stated improving waste management by increasing resource efficiency and reusing and recycling waste to deliver economic value was one of the “key environmental challenges” facing the UK.
Taking its commitment to bio-fuels further, the Government also announced greater capital allowances for the cleanest bio-fuel plants. A 100% first year allowance will be introduced — subject to state aids approval — for bio-fuel plants that meet certain criteria to ensure that good carbon balance is incorporated into their design. The Government anticipates the scheme will be introduced in early 2007, once discussions have been concluded with the European Commission on state aids. It said the qualifying criteria would be kept under review, and updated to take new technologies into account.
Proposals were also made to develop options for an enhanced capital allowance scheme to encourage investment in developing markets for the outputs (e.g. refuse derived fuel) of new treatment facilities.
And the Government also confirmed that the standard rate of landfill tax will increase by £3/tonne to £21/tonne in 2006/07.