Waste management companies that benefit from Feed-In Tariff (FIT) schemes will be prevented from receiving investment from Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) from April 2012.
In a section of the 2011 Budget report, the Treasury announced plans to reform EIS – a scheme of tax relief offers to investors in high risk trading companies, and VCTs – London Stock Exchange-listed investment trusts which invest in trading companies – to stop companies which claim FITs from benefiting from investment.
According to the Budget statement: “The Government will consult on options to provide further support for seed investment, simplification of the EIS rules by removing some restrictions on qualifying shares and types of investor, and refocusing both EIS and VCTs to ensure they are targeted at genuine risk capital investments.”
It added: “FIT businesses will be added to the excluded activities list.”
A Treasury spokesperson has since confirmed that the FITs exclusion will not be part of the consultation, and will go head in April 2012, subject to EU State Aid clearance.
Triodos Bank relationship managerJohn Stephens told MRW: “The commercial contract structure of many waste projects means they are heavily reliant on equity investment, as senior debt funding is difficult to provide. The likely impact of removing the possibility of equity investment through the EIS and VCT schemes is that many projects will not become viable.”
The news comes days after the Department for Energy and Climate Change announced plans to increase FITs for farm-based anaerobic digestion facilities, after it was found that only two had been accredited under the FIT scheme.
The Anaerobic Digestion and Biogas Association chief executive Charlotte Morton said: “Adding businesses claiming FITs to the list of activities excluded from EIS and VCT investment would be a terrible step backwards for the AD industry.
“Getting investment into new plants remains a challenge for businesses, and for many the EIS route is the only way they can raise the investment needed, so the last thing they need is a move which could remove this option.
“ADBA has already been contacted by concerned members, some of whom have projects in development which are now at risk of being abandoned. We will be pushing Government hard on this, and hope they will see how devastating this step could be.”