Memorandum by National Power (CC82)
CLIMATE CHANGE LEVY
National Power has the following comments regarding
the Climate Change Levy, in particular relating to the proposals
made in the pre-budget report of 9 November.
EXEMPTION OF
CHP
National Power is the UK's leading developer
of combined heat and power generation plants and we recognise
the environmental benefits that the high efficiency of CHP plant
can deliver. The Chancellor recognised this when he stated that
`good quality' CHP would be exempt from the levy. However, we
believe that it is essential that the exemption of CHP plant from
the levy does not provide an incentive to develop oversized schemes
where demand for heat and electricity are not matched. Given that
efficiencies of 60 per cent are available with the latest CCGT
technology, it is our view that an industrial scale CHP ought
to be required to achieve efficiencies of around 75 per cent to
be able to count as `good quality'. The overall efficiency of
the plant is a more important consideration than whether the electricity
is sold directly to a customer or is sold through a supply company.
EXAMPETION OF
RENEWABLES
We support the exemption of renewables from
the climate change levy but it is important to ensure that there
is the potential for new schemes to be developed to be able to
benefit from the exemption, for example through changes needed
in the planning process.
The Chancellor, in his pre-budget report notes
that "Subject to legal and practical considerations, the
Government intends to exempt electricity generated from renewable
sources of energy (other than large scale hydro plant) from the
levy'. This should include existing renewables (possibly those
projects commissioned since the introduction of NFFO) as well
as new renewables projects. Whilst we recognise that there is
a need to be able to accredit these sources, a more flexible scheme
than the Energy Savings Trust `Future Energy' may be needed. Suppliers
should be able of offer customers an accredited mix of renewable
and non-renewable energy. Customers should then be able to apply
for a rebate on the renewable part of the supply.
ENERGY INTENSIVE
SECTORS
The pre-budget report notes that only sectors
covered by the IPPC Directive will be eligible to enter into agreements
to qualify for an 80 per cent discount from levy rates. Consideration
should be given to whether non-IPPC companies should be allowed
a rebate if they enter into a legally binding emissions trading
scheme as proposed by the CBI/ACBE outline proposals for a UK
emissions Trading Scheme.
RECYCLING OF
LEVY
We welcome the increased support for energy
efficiency measures announced in the pre-budget report. Additional
recycling could provide even greater benefits in terms of reductions
in greenhouse gas emissions.
FUTURE RATES
OF THE
LEVY
The pre-budget report gives the levy rate for
2001-02. For industry to be able to make investment decisions
the rate should be fixed for a period of say three years, or it
must be clear how the rate may change in the future.
November 1999
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