Britain is to introduce a cap on revenues for companies that produce low-carbon electricity to mitigate the impact of soaring energy prices on consumers.
The temporary cap on energy companies that generate electricity from renewable and nuclear energy is being introduced in England and Wales, the government announced in a statement on Tuesday.
The measure “will reduce the impact of unprecedented wholesale prices on consumers and the taxpayer by introducing a revenue limit, limiting the amount producers can earn”, the government said.
The main opposition Labor Party called the measure a “one-off tax”, which Business Minister Jacob Rees-Mogg denied.
He told the BBC that after intervening on retail energy prices, the UK government was now acting on wholesale prices.
“It’s just misrepresenting what’s being done and misunderstanding how the market works,” he said.
“What it does is streamline the market in a way that energy companies have favored,” he added.
“It’s clearly not a tax. It has nothing to do with the profits these companies make.”
Liz Truss successfully campaigned to become prime minister saying she opposes the idea of a tax on the profits of energy giants.
Boris Johnson’s previous government introduced a one-off tax on oil and gas companies’ profits, but this could be largely offset by investment in hydrocarbon production.
– ‘Double standard’ –
Before the introduction of recent energy subsidies, ‘businesses and consumers faced increasing financial turmoil, with energy bills estimated at £6,500 before the government stepped in,’ the government said. .
Truss last month introduced a two-year cap on domestic consumer energy bills at 2,500 pounds ($2,770) per year per average household.
Businesses will see around half of their bills covered for six months.
The UK is particularly dependent on gas for its electricity, the price of which has skyrocketed since the start of the Russian invasion of Ukraine on February 24.
Shell boss Ben van Beurden told an energy conference last week that in light of soaring energy prices and resulting inflation, governments should impose more taxes on companies in the sector.
Dhara Vyas, policy director at industry lobbyists Energy UK, warned that the new revenue cap mechanism, the details of which have yet to be worked out, must not ‘risk the very investment the UK needs to ensure long-term sustainable economic growth”. .
Dan McGrail, chief executive of renewable energy organization RenewableUK, added that the move risked “diverting investment into the fossil fuels that have caused this energy crisis”.
Environmental NGO Greenpeace UK has accused the government of “blatant double standards”.
“Was it just a dream or did we all hear the Prime Minister say just a few weeks ago that she was against a windfall tax? said Policy Director Doug Parr.
“Now she’s going to impose a de facto one after all, but only on power producers, not a real one on oil and gas companies. This blatant double standard makes no sense.”
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Why Some Countries Are Leading the Green Energy Transition
Berkeley CA (SPX) Oct 07, 2022
Oil and gas prices soared after Russia’s invasion of Ukraine in the spring of 2022, creating a global energy crisis similar to the oil crisis of the 1970s. While some countries used the price shock to accelerate transition to cleaner energy sources, such as wind, solar and geothermal, others have responded by expanding fossil fuel production. A new study published this week in the journal Science identifies the political factors that allow some countries to take the lead in ado… Read more