09/07/2015 12:54 BST | Updated 09/07/2015 13:59 BST

Budget 2015: Climate Change Levy On Renewables Is Like 'Apple Juice Paying Alcohol Tax"

Danny Lawson/PA Wire
Turbines at Whitelee Windfarm in East Renfrewshire, the UK's largest onshore wind farm

George Osborne’s plan to add the climate change levy to renewable electricity is like making “apple juice pay an alcohol tax”, a furious green campaigner is claiming.

The Chancellor announced in yesterday’s Budget that renewable energy would no longer be exempt from the levy, introduced in 2001 to help reduce the UK’s carbon footprint.

Environmentalists are furious, with the Green Party calling the move a “serious undermining” of the renewable energy industry.

Pressure group Friends of the Earth went even further, with activist Alasdair Cameron saying it was “like making apple juice pay an alcohol tax”.

In a post on the group’s website, he said: “For a man who constantly whines about producing renewable energy – and tackling climate change – in the cheapest way possible, the Chancellor has just effectively put a carbon tax on carbon free electricity, which will mean fewer renewables and more uncertainty for the industry.”

The climate change levy applies to energy consumed by business, with domestic and transport sectors exempt.

From April next year, the levy runs at 0.559 pence per kilowatt hour on electricity and 0.195 pence per kilowatt hour on gas.

Delivering the Budget in the Commons yesterday, Mr Osborne justified axing the exemption as it helped overseas renewable companies.

It is predicted to raise £1billion a year for the Treasury.

He said: “Now we have a long term framework for investment in renewable energy in place, we will remove the out-dated Climate Change Levy exemption for renewable electricity that has seen taxpayer money benefitting electricity generation abroad.”

Green Party leader Natalie Bennett described the measure as “Tory short termism at its most dangerous.”

She told The Huffington Post UK: "Osborne’s decision to remove the exemption for renewables from the climate change levy is at best utterly illogical and at worst a serious undermining of the UK’s renewable energy industry. As has been pointed out by a number of organisations, this levy could mean the difference between profit and loss for some projects, dealing a real blow to the UK’s progress towards a greener economy.”

Dr Doug Parr, policy director at Greenpeace, echoed her comments, and branded Mr Osborne as a “man out of step with the times."

He said: "By removing the climate change levy exemption from renewable electricity, Osborne is taxing clean power as if it were a fossil fuel. This will make it more expensive for business to buy electricity from renewable power.”

Labour's Shadow Secretary of State for Energy and Climate Change, Caroline Flint MP, said: "This is yet another example of the Tories undermining investor confidence in renewable energy. They have already tried to stop the development of the cheapest form of clean energy by pulling the plug on onshore wind.

"Since taking office, they have consistently put placating their backbenchers who are opposed to renewable energy generation above the massive opportunities for jobs and investment that moving to a low carbon economy would provide this country.”