Climate Change Levy (CCL)

Climate Change Levy (CCL)

Introduction

The Climate Change Levy (CCL) is an environmental tax implemented in the United Kingdom to incentivise businesses to reduce their carbon emissions and promote sustainable energy practices. This page provides an overview of the CCL, including its purpose, applicable rates, exemptions. It also provides information about the CCL discount to benefit businesses.

Purpose of the Climate Change Levy

The primary aim of the Climate Change Levy is to reduce carbon emissions by encouraging businesses to adopt energy-efficient measures and utilise renewable energy sources. By imposing a tax on non-renewable energy, the government aims to drive a shift towards cleaner and greener alternatives, promoting sustainability and environmental responsibility.

Applicable Rates

The CCL rates for different taxable commodities are as follows (as of April 2023):

  • Electricity: £0.00775 per kilowatt hour (kWh)
  • Gas: £0.00672 per kWh
  • LPG (liquefied petroleum gas): £0.02175 per kilogram (kg)
  • Any other taxable commodity: £0.05258 per kg

You can find more information about applicable rates at https://www.gov.uk/guidance/climate-change-levy-rates

Please also see our page on Carbon Offsetting.

CCL Discount

The Climate Change Levy Discount aims to encourage energy-intensive industries in the UK to prioritise energy efficiency and carbon reduction. By entering into a voluntary Climate Change Agreement (CCA) with the government, eligible businesses commit to specific targets for reducing their carbon emissions. In return, they receive a discounted rate on the Climate Change Levy, providing financial incentives for sustainable practices. Let’s delve deeper into the details of the CCL discount.

Exemptions and Reductions

Certain businesses may qualify for exemptions or reductions on their Climate Change Levy payments. These include:

  1. Energy Intensive Industries: Sectors such as steel, chemicals, and manufacturing may be eligible for Climate Change Agreements (CCAs). CCAs offer discounted rates in exchange for meeting energy efficiency and carbon reduction targets.
  2. Renewable Sources: Businesses that generate electricity from renewable sources like wind, solar, or biomass are exempt from the Climate Change Levy.
  3. Charities and Non-Profit Organisations: Charitable and non-profit organisations may be eligible for reduced rates or exemptions from the CCL.

Benefits of reducing carbon emissions

Businesses that proactively reduce their carbon emissions and implement energy-saving measures can reap several advantages from the Climate Change Levy:

  • Cost Savings: By adopting energy-efficient practices, businesses can lower their energy consumption, leading to reduced Climate Change Levy payments and cost savings over time.
  • Environmental Reputation: Demonstrating a commitment to sustainability and carbon reduction can enhance a business’s reputation, attracting eco-conscious customers and partners.
  • Competitive Advantage: Embracing clean energy solutions can provide a competitive edge in a market increasingly focused on environmental sustainability.
  • Access to Support: Businesses can tap into government support, guidance, and financial incentives aimed at promoting energy efficiency and carbon reduction initiatives.

Conclusion

The Climate Change Levy in the UK plays a crucial role in driving businesses towards carbon reduction and energy efficiency. By understanding the purpose of the CCL, the applicable rates, and the potential exemptions and reductions available, businesses can leverage the benefits it offers. Implementing sustainable energy practices not only contributes to a greener future but also yields cost savings and enhances a company’s environmental reputation. Embrace the Climate Change Levy as an opportunity to promote sustainability while reaping the rewards of energy efficiency.