Energy efficiency at risk from tax review

11th November 2013


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  • Mitigation



The prime minister has announced plans to review environment "levies" as a way rein in rising energy bills, but it is unclear which charges will come under scrutiny

Confusion has been caused because energy minister Michael Fallon has disputed Decc’s confirmation that support for renewables would not be part of the appraisal.

In a statement, the energy department had confirmed: “No one is talking about changing investment incentives for renewables, such as the renewables obligation and feed-in tariffs, which are essential for investor confidence in the renewables sector.”

However, Fallon, appearing before the environmental audit committee, said that all levies would be under the microscope.

The confusion follows David Cameron’s statement to parliament that government needed to “roll back” some of the green regulations and charges that are putting up bills”.

Businesses operating in the built environment have warned the government not to scale back levies on energy bills that support energy efficiency. A letter to the prime minister from chief executives at a number of firms, including E.ON, Carillion and Willmott Dixon, argues that energy efficiency is the “only sure way” to protect against rising bills in the long term.

The warning follows evidence that it is difficult for companies to access finance to invest in energy efficiency.

In a poll of more than 300 energy specialists across the UK, conducted by Siemens Industry and the Energy Institute, 88% said that banks were either not interested in supporting investment in energy-saving technologies or provided “little feedback”. Just one respondent reported having actually received finance for an energy-efficiency initiative.

Higher capital allowances for firms wanting to invest in energy-efficient equipment and the creation of the Green Investment Bank were positive moves, commented Stephen Barker, head of energy efficiency at Siemens. “But the effectiveness of these measures is limited as there is a critical gap in the actual delivery of finance,” he argued.

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