The Court of Appeal dismissed a case brought by Infinis Energy challenging the UK treasury's decision in summer 2015 to withdraw an exemption to the climate change levy (CCL) for renewable electricity with less than a month's notice.
The CCL is a tax on businesses' power usage, designed to encourage energy efficiency and to reduce carbon emissions.
The UK announced in July 2015 the CCL exemption for renewable electricity would be removed, saying the removal would "correct an imbalance in the tax system by preventing taxpayers' money benefitting renewable electricity generated overseas, and by helping ensure support for low carbon generation provides better value for money for UK taxpayers".
Biomass firm Drax Group and Infinis Energy lodged joint judicial review proceedings against the decision, claiming it gave operators far too little warning, but lost their case in the High Court in February.
Infinis, which operates 16 onshore wind farms across the UK, determined to appeal the case. But Drax, the UK's largest power company, decided not to "after seeking legal advice".
The challenge was on the basis that there was a legitimate expectation by operators the exemption would continue; the decision breached the EU proportionality principle; and it violated the claimant's rights under article one of the European Convention on Human Rights.
But the Court of Appeal (CoA) rejected the case on all three grounds.
As with the High Court, the CoA was satisfied the government had given no indication that the exemption would continue.
"In the absence of any precise assurance, it was always inherently foreseeable that there was the possibility of an immediate withdrawal," it said.
The exemption was "part of a fiscal regime and, like all fiscal regimes, subject to change in the discretion of the government of the day and parliament in the light of current economic conditions".
On proportionality, it said that "a mere change of income for individuals or companies because of a change in the tax regime cannot be regarded as something which indicates disproportionality in a tax measure adopted by a state".
And it made short shrift of the human rights aspect of the case, agreeing with the High Court that this would only arise if the previous claims on legitimate expectation or proportionality were successful.