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Dow Jones Newswire report: Coal Mine Methane Power Exempt From UK Climate Change Tax
Submitted: 3 November 2003
Electricity generated from coal mine methane - a waste gas from abandoned coal mines - is now exempt from the U.K.'s Climate Change Levy, the U.K. government said Monday. The news will mean a 15% increase in income for coal mine methane companies such as Alkane Energy PLC (ALK.LN). The levy is a tax of GBP4.30 a megawatt-hour paid by industrial and commercial consumers of electricity not classified by the government as green. It intends to make consumers emit fewer greenhouse gases either by using less energy, or by using a higher proportion of green energy.
The Customs and Excise office said, "this exemption will help and encourage the industry to harness a potentially damaging gas into a cleaner, greener, more environmentally friendly source of energy". "With carefully targeted tax breaks such as this, the government is supporting the growth of new industries in areas that have been hardest hit by the closure of old ones", John Healey, Economic Secretary to the Treasury, said. Steve Golby, financial director for Alkane Energy, said, "While it is quite significant - it will mean a 15% increase in income for our existing sites - we need more than that to build new sites".
Alkane, which currently operates four green energy parks, can develop up to 100 sites under its current license. But Golby says unless there is more support from the government - in particular inclusion into the Renewables Obligation - none of the methane in the other sites are likely to see the spark of a power plant combustion chamber. The RO scheme encourages the growth of renewable energy by making the power they generate more expensive. Power distributors are required to provide a certain percentage of the electricity from approved renewable sources. "All the other sources of methane are supported by the Renewable Obligation", said Golby, "but not coal mine methane". If the coal mine methane were to be an approved renewable energy fuel, Golby said, "the benefits from that would be 10 times that of this CCL exemption". He says the U.K. has a potential to produce up to 2% of its electricity needs from the fuel. The Department of Trade and Industry is conducting a study due out early next year of the ways the government can support the coal mine methane industry.

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