Drax and Infinis lose bid to overturn CCL exemption axe

Drax power station: Creative Commons/Paul Glazzard
Drax power station: Creative Commons/Paul Glazzard

Drax and Infinis have lost their bid to overturn the government’s decision to axe Climate Change Levy exemptions for renewable power.

The two firms had challenged the decision, outlined in George Osborne’s July Budget, on the basis that only 24 days’ notice had been given.

The High Court concluded that the government had not provided specific assurance on the continuation of exemptions and so was in the clear to amend the CCL.

Drax chief executive Dorothy Thompson said the Court had acknowledged the merits of the case, but that the company would now move on, given the ruling in the government’s favour.

“Since their introduction in 2001, CCL exemptions such as Levy Exemption Certificates (LECs) have played a critical role supporting investment in a wide range of renewable technologies,” said Thompson.

“In recognising our right to bring this case, the Court acknowledged that the removal of LECs was sudden and unheralded.  However, it concluded that the government had not provided any specific and clear assurances on the continuation of exemptions and accordingly ruled in their favour.

“This hearing has raised a number of important issues regarding the way in which the government encourages private sector investment in UK energy infrastructure. The country needs new generating capacity and investment to help make this happen.  We look forward to working with the government to achieve this.”

See the full statement here.

How the CCL exemption worked

Businesses have to pay for using fossil generated power under the Climate Change Levy. But, up until 1 August last year, if they used renewable power, the charge was not added to their energy bill. The CCL came into force in 2001 to encourage energy efficiency, and with it, the exemption, to encourage uptake of renewable electricity. It is essentially a carbon tax.

HMRC stated that scrapping the exemption will save £3.9 billion by 2020. It said that the move was “not expected to significantly increase business energy bills” nor “impact on wholesale prices”, although that was disputed by third party intermediaries.

Related stories:

Drax and Infinis take government to court over Climate Change Levy changes

Osborne axes CCL exemption, promises review of ‘alphabet soup’ of energy taxes

CCL exemption will add eight figures to energy bills warn TPIs

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