Climate change levy exemption may benefit Nuclear power industry
December 2009
The fresh tax breaks government is considering for Britain’s nuclear power industry that could smooth the way for the construction of a new generation of UK reactors.
The levy, introduced in 2001, generates an estimated £1 billion a year for the Treasury. Suppliers pay the levy on electricity provided to businesses to Customs & Excise and then pass on the costs to customers.
Other low-carbon sources of electricity, such as wind energy, are already exempt from the levy, but it draws no distinction between low nuclear and higher-emitting coal or gas generation.
Jeremy Nicholson, a spokesman for the Energy Intensive Users’ Group, an industry association has been pressing for the change, estimated that an exemption for nuclear power would be worth up to £300 million a year to the industry, or £3 billion over the next decade, during which a big construction programme for new reactors is planned.
Though no decisions have been made, the tax break could help energy companies that are considering investing in new nuclear stations by ensuring that nuclear electricity is more competitive compared with electricity generated from gas or coal.
Head of energy at the CBI, Matthew Farrow, stated that the employers’ organisation had been pressing hard for the levy to be dropped for nuclear power generation. He said that the CBI had held regular meetings with Ed Miliband, the Energy Secretary, and officials from his department to discuss the issue, as well as other forms of support for new nuclear infrastructure.
“They are clearly thinking about these issues,” Mr Farrow said. “Our view is that there should be a change to the levy. It’s common sense. Whether that would be sufficient is unclear . . . but any low-carbon electricity production ought to be exempt.”
The British Government anticipates that the new nuclear plants will help to reduce the supply gap that is opening up in Britain’s energy supplies by 2015 as ageing coal-fired stations are removed from service to meet tough new European Union pollution rules.
The first new reactor is due to be built at Hinkley Point in Somerset by EDF, which is expected to be operational by the end of 2017. EDF also hopes to build two new reactors at Sizwell in Suffolk.
Michelle Williams from Artemis Solutions Group who specialise in recruiting for the Utility sector comments “Climate change levy exception will give a big boost to the building of new generation of nuclear reactors. Big plans are already underway for the expansion of this sector in the UK”.
