Climate Change Levy

How does the Climate Change Levy (CCL) affect your business?

In 1997, at the Kyoto Summit on Climate Change, the EU signed an agreement to reduce Greenhouse Gas Emissions by 8% on 1990 levels by the year 2010.

The UK Government has now set itself a target to reduce emissions by 20% by the year 2010.

The Climate Change Levy (CCL) was introduced in April 2001. The CCL is an energy tax that adds approximately 15% to typical energy bills of UK businesses.

The Climate Change Levy is a key part of the UK government’s strategy to promote energy efficiency and reduce greenhouse gas emissions.

The CCL is applied to electricity, gas, coal and Liquid Petroleum Gas (LPG), but is not applied to any domestic supplies or fuel from renewable sources. The impact of the CCL upon UK businesses has been helped by a 0.3% reduction in National Insurance contributions.

Energy intensive industries are able to join Climate Change Agreements to help further mitigate the effects of this tax.

How much is it?

The levy is charged at a flat rate on each kWh of energy consumed, currently at the following rates since the 1st April 2009, when the price of the levy rose in line with inflation:

Electricity – 0.470p/kWh (+0.014)
Natural Gas - 0.164p/kWh (+0.005p)
Coal/lignite – 1.281p/kg (+0.038p)
LPG – 1.050p/kg (+0.032p)

How is it collected?

The levy is administered by Customs & Excise. It is collected by your energy supplier on behalf of Customs & Excise, and appears on your electricity or gas bill, above the VAT line.

How can I reduce my CCL?

For certain energy-intensive companies discounts of up to 80% are available, but they involve implementing an action plan to reduce your energy consumption considerably over the next 10-15 years.

the following types of energy are exempt from the levy:

Good quality Combined Heat & Power systems (CHP)
Renewable energy (solar, wind etc)
Waste derived power
Road fuels

The Carbon Trust

The Carbon Trust was set up as part of the government’s ongoing climate change programme as an independent body to help UK business reduce greenhouse gas emissions and implement low carbon technology in the UK.

They have launched a powerful new campaign to raise awareness of energy efficiency. The campaign, which uses the tagline ‘Carbon Costs’, highlights the fact that British business is wasting as much as 20 per cent of its energy.

They have many informative sections on their websites. Below are a few that should be of interest to all businesses.