UK: Tax cut for oil and gas, tax rises for renewable generators revealed in Budget

The renewables industry today remains frustrated and unclear following announcements contained in the Chancellor’s Spring Budget. A new series of tax breaks and government support has been included for the fossil fuel industry, yet support for renewable energy remains thin.

The Budget contains the following announcements:

For fossil fuels, the Government will:

• effectively abolish the Petroleum Revenue Tax
• reduce the Supplementary Charge from 20% to 10%
• provide an additional £20m in funding for seismic surveys
• consult on a new shale wealth fund

For energy intensive users, the Government will:

• increase existing Climate Change Agreement (CCA) criteria, which will continue to shield energy intensive users and does little to assist them in shifting to a more efficient, lower-carbon model

For renewable generation, the Government will:

• increase the Climate Change Levy which from 2019 now includes renewable power
• continue to freeze the Carbon Price Support rates at a time when it is needed to support renewable generation

The Government has not offered real clarity around issues critical to new investment and employment growth in the renewables sector. This Budget could have increased investor confidence by making clear the funding available in all future Contracts for Difference pots, the funding available for each technology, the date of the next CfD auction, or outlined the future of the Levy Control Framework after 2021.

Dr. Nina Skorupska CBE, Chief Executive of the Renewable Energy Association said:

“The direction for this government is becoming increasing clear, with a huge tax cut for Oil and Gas with the most polluting industries continuing to be protected, but a tax raise for renewable generators through the now thoroughly misnamed Climate Change Levy”

“The removal of the supplementary charge for oil and gas industry amounts to a £1bn giveaway, added on top of the subsidies planned for nuclear, gas and diesel this year, all whilst renewables are getting continually squeezed and blocked”

“Less than three months after the Government heralded the signing of the Paris agreement, we see more support for fossils fuels and protection for polluters. If the government are serious about their national and international commitments they need to back up the empty rhetoric with real actions.”