Britain intends to levy ‘de facto windfall tax’ on low-carbon energy producers

The United Kingdom has proposed a temporary revenue cap on low-carbon electricity generators, which the industry has described as a ‘de facto windfall tax’ on renewable energy providers.

 

Although new Prime Minister Liz Truss stated last month that she is opposed to placing windfall taxes on firms, the government is looking for methods to contain rising energy prices and create income to assist pay tax cuts.

 

Following Russia’s invasion of Ukraine, gas prices have skyrocketed across Europe and the United Kingdom, driving up the cost of energy.

 

Because electricity costs are often determined by gas, the new strategy would apply to low-carbon producers that sell their power at such high prices but do not require expensive fuel.

 

‘Low-carbon electricity generators are thus benefiting from abnormally high prices, while consumers must pay significantly more for energy generated by renewables and nuclear, despite the fact that they often cost less to produce,’ the Department for Business, Energy, and Industrial Strategy (BEIS) stated.