Renewable power companies challenge UK removal of climate change levy exemption

Out-Law News | 04 Sep 2015 | 2:49 pm |

Two energy companies have begun legal action against the UK Treasury's recent decision to remove exemptions to the climate change levy (CCL) for electricity generated from renewable sources. 

Infinis and Drax have jointly begun proceedings, asking for a judicial review of the notice period given by the Treasury.

The exemption was removed without an "appropriate notice period" being given, the companies said in a statement. Only 24 days' notice was given.

The CCL was introduced in 2001. It is a tax on UK business, collected by energy suppliers, that is designed to encourage energy efficiency, reduce carbon emissions and promote energy from renewable sources.

Businesses were previously able to claim an exemption if they could show a levy exemption certificate, showing that they bought energy from qualifying renewable energy sources.

In his July budget on 8 July the UK chancellor announced the removal of the exemption from 1 August.

"Businesses make long-term investment decisions based on a predictable regulatory framework," Andrew Brown, a spokesman for Drax, told Bloomberg. "A reasonable and proportionate notice period would allow us to better manage our business. For example, we may have pre-sold power assuming this would be in place and therefore incurred costs."

The UK has recently announced an end to small-scale solar subsidies, and brought forward the end date for onshore wind power subsidies.