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9 October 2003 - European Union state aid clearance has been granted for electricity generated from CMM to be exempt from CCL, according to Alkane Energy plc, a UK producer of Coal Mine Methane (CMM) from abandoned coal mines.
It was first announced in the budget in April 2002 that full exemption from CCL was to be incorporated into the Finance Act 2002 and that EU state aid clearance would follow thereafter. This was to correct the anomaly whereby CMM used directly as an industrial fuel was exempt from CCL but electricity generated from CMM was not.
The Association of Coal Mine Methane Operators (ACCMO) lobbied the government for this inconsistency to be rectified and said it was delighted that clearance has now been granted.
The EU ruling will directly benefit Alkane's customers, as they will now be able to sell CCL exempt electricity to industrial and commercial users. In anticipation of this change Alkane's gas sales contracts provide for the company to share any benefits from a change in tax regime with their customers. It is expected that this exemption will result in an increase of approximately 15 per cent in revenues at the sites where Alkane sells its gas for electricity generation.
The company anticipates that this new benefit will come into effect in November 2003.
Commenting on the EU state aid clearance, Dr Cameron Davies, Chairman of Alkane Energy said, "Both Alkane and ACCMO welcome the announcement that EU state aid clearance has been granted and see it as a resolute move demonstrating both EU and UK Government support for the CMM industry, which benefits the environment by reducing greenhouse gas emissions. We will continue to lobby the UK Government for further financial incentives and benefits, particularly for inclusion in the Renewables Obligation alongside landfill and sewage methane which are already included."
Alkane is developing its first CMM project in Germany and has option rights to develop 7 more projects in Germany
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