Question

To ask the Secretary of State for Energy and Climate Change, what assessment her Department has made of the effect of the inclusion of renewable energy in the Climate Change Levy on incentives for businesses to operate in a more environmentally friendly way.

The Climate Change Levy (CCL) renewables exemption offered poor value for money, as it provided indirect support to renewable generators, and a third of its value went to supporting overseas renewable generation projects, which did not contribute to the UK’s climate change or renewables targets and often received subsidies from home Governments. The rise in UK renewable electricity generation and imports led to a decline in CCL revenue. The independent Office for Budget Responsibility published forecasts showing that this decline would have continued to 2020 if the exemption remained in place and that virtually no CCL tax would have been paid on electricity by 2020, which would have undermined the energy efficiency objectives of the CCL.