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United Kingdom

UK industry calls for rolling seven-year LCF

UK: The Confederation of British Industry (CBI) has called on the government to set a seven-year rolling Levy Control Framework (LCF) and provide greater clarity on wind subsidies.

The CBI report calls on the UK's new government to provide clarity and stability in energy policy
The CBI report calls on the UK's new government to provide clarity and stability in energy policy

The lobby's "Setting the Bar" report said the new UK government needs to "stay the course" following the investment of £45 billion in energy infrastructure, the 2013 Energy Act and the Electricity Market Reform programme started by the previous coalition government.

The CBI called for a period of enduring stability. "With energy politics all too often trumping energy policy in recent times, business will be keen to see that trend reversed," the report said.

In its recommendations, the CBI calls on the government to set the budget for the LCF beyond 2020/21 for a further seven-year period and update it on a rolling basis. The LCF sets a budget that can be spent on low-carbon energy without affecting consumers' bills.

Introduced in 2013 the Levy Control Framework was set up by the Deparment for Energy and Climate Change. The framework currently extends up to 2020/2021 where spending is capped to £7.6 billion (in 2011 prices)

The CBI said offering long-term clarity is essential for sectors such as offshore wind.

The report also calls for the government to provide greater transparency in the Contracts for Difference (CfD) allocations and "strike prices" to improve confidence in the sector.

The CfD system sees generators receive a top-up payment when the wholesale electricity price is below a pre-agreed strike price, and paying money back when the price rises above it.

The CBI's report did not criticise the government's recent decision to end the Renewables Obligation subsidy a year early for onshore wind. However, it said: "The government must work closely with industry to get the details right on how it intends to implement its manifesto pledge in order to minimise the impact on investor confidence.

"Clarity will be needed on how the government will align its decarbonisation and cost-effectiveness ambitions in light of this decision."

The CBI also said the government should take a leading role in the COP21 United Nations climate change talks in Paris later this year.

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