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Carbon Sequestration

Volume 470: debated on Friday 25 January 2008

To ask the Secretary of State for Business, Enterprise and Regulatory Reform whether carbon capture and storage technology will be made exempt from the Climate Change Levy. (175433)

I have been asked to reply.

The climate change levy is a tax on non-domestic use of energy aimed at promoting energy efficiency. There are currently no commercial-scale power generation plants in the UK which deploy carbon capture and storage, so the issue of liability to pay the levy does not arise.

HMT consulted on the barriers to carbon capture and storage (CCS) deployment in 2006 and the Government announced in the Energy Review that the next logical step would be a full-scale demonstration project. A competition to design and build one of the first ever-commercial CCS demonstration projects was launched by the Prime Minister on 19 November. This demonstration will provide the evidence, which will enable us to take informed policy decisions, including on taxation issues.

All taxes and reliefs are kept under review and any changes are announced by the Chancellor as part of the Budget process.