The Treasury is to replace the Levy Control Framework (LCF) with a new set of controls to be outlined later this year.
In today’s spring Budget, the Treasury said the LCF has helped to control the costs of low carbon subsidies in recent year but will now be scrapped.
The government had previously stated it would set out future options for the LCF in the spring Budget.
BEIS’s latest estimate puts the LCF projected spend in 2020–21 at £8.4bn, £0.8bn more than the cap imposed in 2013 but within the 20% headroom.
Energy and Climate Intelligence Unit director Richard Black said: “The Levy Control Framework was a blunt instrument, and few people will be sorry to see it go.
“Its worst aspect was that it seemed to make renewable energy more expensive when bills were going down – and logically, that is the time to be investing, when people can most afford it.”
In a Budget with scant mention of the green economy, the government reaffirmed its commitment to carbon pricing with details on prices for 2020s due in autumn statement.
Currently, UK prices are determined by the EU Emissions Trading System and Carbon Price Support.
Starting in 2021–22, the government will target a total carbon price and set the specific tax rate at a later date.
Wind developer Falck Renewables said the Budget was a missed opportunity for renewables.
“Not to keep energy bills lower by harnessing the UK’s potential for new generation from the cheapest power technologies such as onshore wind in windy Scotland is a missed opportunity for Brexit Britain,” said chief executive Toni Volpe.
“Over-reliance on costlier alternatives is a false economy that can only hamper the government’s new industrial strategy.”
Image: UK parliament (FreeImages)
