Letter to Hunt

Green targets ‘at risk’ without tax relief, says sector

Perth car solar port
Solar projects like this one in Perth could be stifled without tax incentives

Britain’s ability to develop competitive green energy projects is at risk without a clear plan that includes tax incentives, according to industry leaders.

Five trade associations have written a joint letter to the Chancellor saying that the UK is at risk of losing out to the United States and the European Union if he fails to introduce key measures in the Spring Budget to back up the government’s own net zero strategy.

They say decisions on a number of projects are being delayed as supply chain companies are hit by inflationary pressures and the energy crisis.

The letter from the chief executives of Scottish Renewables, RenewableUK, Energy UK, the Nuclear Industry Association and Solar Energy UK, states: “Despite our industry’s commitment to the low-carbon energy transition, we are concerned that there is no clear government plan to deliver green economic growth and continue attracting clean energy investment into the UK.

They argue that “many project developers and supply chain companies which were already operating within very small margins are now finding that profits are disappearing completely”.

There is a call for reform of capital allowances, and financial incentives for investment in low carbon energy in response to those being offered by the US in its $216 billion Inflation Reduction Act and the European Union in its REPowerEU package.


The letter states that the UK has created an Energy Profits Levy with 91% investment relief for oil and gas, but an Electricity Generators Levy with 0% relief for clean power generators.

It urges the Chancellor to address this in his Spring Budget by including an investment allowance in the Electricity Generators Levy to level the playing field with fossil fuels as part of a wider reform of our capital allowances regime, to preserve the UK’s international competitiveness.

Scottish Renewables CEO Claire Mack added: “The clean energy sector is one of the UK’s most dynamic and fastest-growing industries, and, with the right policy support, will be the means to revitalise our economy.

“However, with widespread uncertainty and increasing international competition, the UK’s status as a leading destination for investment in clean energy is at risk.

Claire Mack
Claire Mack: ‘widespread uncertainty’ (pic: Terry Murden)

“It is therefore critical that the Spring Budget is used to reform our capital allowance regime to maintain the UK’s position at the forefront of the clean energy transition.

“Any delay, and other places in the world will benefit from the unparalleled economic and environmental benefits that clean energy investment promises to deliver whilst the UK misses out”.

The government argues that it is taking action to encourage investment in renewable generation.

RenewableUK’s CEO Dan McGrail said: “Investments in renewable energy and new supply chains may dry up unless the Chancellor takes decisive action and implements the key measures which we have set out in our letter to secure tens of thousands of high quality jobs and attract billions in private investment”.



Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.