As it is becoming more common for large multinationals to implement their sustainability strategies and meet their net zero emissions target set during the Paris Agreement, the investment into the green transition can only go so far if governmental regulation continually supports it and not restrict it.
This comes as one of the UK’s largest onshore wind operators, Community Windpower, threatened to sue the government due to the Electricity Generator Levy (EGL) introduced last year for businesses. Introduced by Chancellor Jeremy Hunt, the EGL requires renewable, nuclear, and biomass companies to face a 45% levy on wholesale revenues above £75 per megawatt hour. This aimed to shield households from high energy prices from the energy crisis caused by Russia’s invasion of Ukraine. However, this did not seem practical as the levy excluded gas and coal-fired electricity generators. An analysis commissioned by Community Windpower found that if their taxes were excluded, the Treasury would have to raise more than 95% of the expected revenue from the windfall tax set until 2028.
As it is understandable that the renewables, nuclear, and biomass companies have seen excellent revenue growth, however, this limits the growth of renewable energy projects, with “shovel ready” projects, may be left unbuilt, due to the levy, leaving start-up costs with no return on investment, and could have large impacts if it affects the whole renewables industry. What would be useful is to have a further analysis of how the levy should be charged and how other industries or revenue streams can be used to offset the increased cost of living.