WHAT IS CLIMATE CHANGE LEVY?

The Climate Change Levy (CCL) is a tax on energy that has been levied on ALL businesses in the UK from 1st April 2001. The objective of CCL is to encourage energy customers to save energy, reducing the release of carbon dioxide into the atmosphere. The UK has international obligations to cut greenhouse gas emissions and the CCL forms part of the government’s Climate Change policy.

Under the Kyoto Protocol, the UK must reduce its greenhouse gas emissions by 12.5% below 1990 levels over the 2008 to 2012 commitment period.

In 1997, the government committed itself to go beyond the UK Kyoto Protocol target by setting a national goal to reduce carbon dioxide emissions by 20% below 1990 levels by 2010. In 2003, the Energy White Paper adopted a longer term goal to put the UK on a path to reduce carbon dioxide emissions by some 60% by 2050, with real progress by 2020.

CCL applies to the use of certain fuels and electricity in industry, commerce, agriculture and public administration. The levy rates have been set broadly in line with the energy content of the fuel to which they apply, and for natural gas the levy is 0.164p/kWh. CCL applies to all industrial and commercial users by usage, not industry. VAT is added after the CCL.

All monies raised by CCL has been recycled back into businesses by a 0.3% cut in employer National Insurance Contributions, and various schemes promoting energy efficiency.

The Chancellor announced that the CCL will be charged on industrial and commercial energy and will follow VAT eligibility rules – so businesses that pay 17.5% VAT on fuel will pay the CCL.

EXEMPTIONS

No site is exempt without a Certificate. CCL cannot be credited back, and will be charged until a Certificate is received.

WHO IS EXEMPT?

The following customers are exempt from the CCL:

  • Customers who pay VAT AT 5% i.e. customers using less than 33 kWh per day for electricity or 145 kWh per day for gas, and charities.
  • Businesses using energy from renewable resources
  • Those using good quality combined heat and power facilities

    • In addition: Energy Intensive Users (EIU) who are covered by the EU’s Integrated Pollution Prevention and Control (IPPC) directive, can qualify for an 80% reduction in the CCL rate if they agree to meet appropriate energy saving targets. Trade Associations have lead negotiations on these agreements with the Department of the Environment, Food and Rural Affairs (DEFRA).

    Horticultural customers qualify for a 50% rebate.