24th May 2022 17:59
(Alliance News) - The UK's net zero energy ambitions could be under threat amid fears the government was considering a windfall tax on electricity generators in a bid to tackle the growing cost of living crisis.
UK Chancellor Rishi Sunak is mulling a windfall tax on more than GBP10 billion of excess profit achieved by electricity generators, the Financial Times reported on Monday.
Clubbing in power generators such as SSE PLC, RWE AG and Iberdrola SA's Scottish Power would boost the revenue a potential windfall tax could bring.
Calls for a windfall tax, particularly on oil majors such as BP PLC and Shell PLC, have intensified as the UK cost of living crisis worsens.
However, Sunak has now asked officials to draw up possible plans to include electricity generators and wind farm operators to the potential levy.
The FT reported that a government insider said "North Sea oil and gas producers are only half the picture" when it comes to the windfall tax.
"The other half is that high gas prices have led to some pretty substantial windfall profits for all electricity generation," the source added.
In London on Tuesday, SSE closed down 8.3% at 1,757.56 pence each. British Gas owner Centrica down 7.2% to 83.16p and Drax - which runs the biomass-fuelled Drax power station in North Yorkshire - down 15% at 689.91p.
A windfall tax is a one-off tax imposed on a company or group of companies and was introduced by Tony Blair's Labour government in 1997.
"The UK government wants to raise money to help households hit by a sharp rise in energy bills. While it is right that some support should be given to those most in need during these difficult times, the way in which new funds are raised means the government runs the risk that energy companies slow down investment in new green projects which could make it harder for the country to hit its net zero emissions targets," said AJ Bell's Russ Mould.
By Arvind Bhunjun; [email protected]
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