Removal of levy exemption seen as a threat by cogeneration industry

The UK Combined Heat and Power Association believes businesses will be forced to close after the UK government confirmed that the industry’s exemption will be removed from the Climate Change Levy.

"The decision will leave many businesses with no alternative but to switch off their plant when the change comes in to effect in 2013," the CHPA said. "130,000 manufacturing jobs today depend on CHP to provide reliable, low-carbon energy."

George Osborne

Platts reports that Wednesday's budget confirmed Chancellor of the Exchequer (finance minister) George Osborne's decision to remove CHP plants' eligibility for CCL Levy Exemption Certificates -- a tax incentive introduced in 2003.

The incentive "has helped build and sustain a CHP fleet which provides 7 per cent of UK electricity, saves 13 million mt of CO2 a year and reduces gas imports by 5 per cent," the CHPA said.

Meanwhile the budget announcement that "fossil fuels used to generate heat in good quality CHP plants will not be liable to the carbon price support rates" served only to remove the obstacle to CHP that was introduced with the Carbon Price Floor, the association said.

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