The Chancellor's Autumn budget had little to say on energy but there is some interesting information buried in the supporting documents.

Low carbon electricity levies

Investors have been asking for certainty about what happens after the Levy Control Framework (which controls how much can be levied from consumer energy bills to support low carbon electricity projects) comes to an end in 2021. A supporting document, Control for Low Carbon Levies, confirms that there will be no new low carbon electricity levies until the burden of such costs is falling, which on current forecasts will not be before 2025. Existing commitments under the Renewables Obligation, Feed in Tariffs and Contracts for Difference will continue to be honoured, as will the up to £557 million promised for future Contracts for Difference rounds. But there won't be any new levies unless the aggregate of existing levies is forecast to have a sustained and significant fall in real terms; or new levies will have a net reduction effect on bills.

This gives some comfort to investors as at least they now know where they stand for the next 7 or 8 years.

But buried in a table in an Annex at the back of the supporting document is the worrying statement that the Feed in Tariff will close in April 2019 – mark that date in your calendars now!

Total Carbon Price

Investors also wanted clarity on what would happen to the Total Carbon Price, currently created by the combination of the EU Emissions Trading System and the Carbon Price Support, in the long term. The Budget stated that the government believe the Total Carbon Price is set at the right level, and will continue to target a similar total carbon price until unabated coal is no longer used. This announcement has been welcomed by energy companies such as Drax.

Oil and gas

The government will enable oil and gas companies to transfer tax histories, to facilitate the transfer of late life oil and gas assets. Draft legislation will be published in spring 2018 and the government will legislate to make transferable tax histories available from 1 November 2018.

The government will also launch a technical consultation on allowing a petroleum revenue tax deduction for decommissioning costs incurred by a previous licence holder. This will support transfers of assets where the seller retains the decommissioning liability.

The Finance Bill 2017-18 will clarify that all tariff income earned by petroleum licence holders is within the ring fence corporation tax regime. This will support the government’s commitment to extend the Investment and Cluster Area allowances to include income from tariff receipts.

Electric Vehicles

As mentioned in our Budget 2017 – Transport article, there is considerable funding earmarked for electric vehicle charging infrastructure. From April 2018 there will also be no benefit in kind charge on electricity that employers provide to charge employees’ electric vehicles. This should encourage workplace charging.


Following on from the Clean Growth Strategy, we hoped that the Budget might set out some clear policy decisions but it seems the government's focus is elsewhere (Brexit). In the meantime there is at least a bit more certainty around the Levy Control Framework and the Total Carbon Price; and confirmation that electric vehicles and the supporting infrastructure is a key priority for government.

Key Contacts

Richard Goodfellow

Richard Goodfellow

Head of IPE and Co-head of Energy and Utilities
United Kingdom

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