B2.4.1 Climate Change Levy


The Climate Change Levy (CCL) is a tax on the use of non-renewable energy by businesses and the public sector. Its aim is to encourage energy efficiency and reductions in greenhouse gas emissions.

Organizations pay the levy through their energy bills, where it is already included in the bill. The tax should be offset by reductions in National Insurance Contributions.

The rate of CCL paid is dependant upon the type of fuel used. Electricity attracts a higher rate than gas, which in turn attracts a higher rate than LPG. Coal attracts the highest rate.

There are some exemptions from the CCL, such as good quality combined heat and power (CHP) systems from renewable sources. In these situations the exemption is applied for through HM Revenue and Customs.

In some circumstances discounts are available. Certain trade associations have a climate change agreement (CCA) with DEFRA, for energy intensive business sectors. Where a CCA is in place, targets are set for improving energy efficiency and reducing carbon emissions.