Climate Change Levy

The Climate Change Levy (CCL) is a tax on energy delivered to non-domestic users in the United Kingdom. Its aim is to provide an incentive to increase energy efficiency and to reduce carbon emissions, however there have been ongoing calls to replace it with a proper carbon tax.

Scope and Purpose

Introduced on April 1, 2001 under the Finance Act 2000 it was forecast to cut annual emissions by 2.5 million tonnes by 2010, and forms part of the UK's Climate Change Programme. The levy applies to most energy users, with the notable exceptions of those in the domestic and transport sectors. Electricity generated from new renewables and approved cogeneration schemes is not taxed. Electricity from nuclear is taxed even though it causes no direct carbon emissions.

Rates

From when it was introduced, the levy was frozen at 0.43p/kWh on electricity, 0.15p/kWh on coal and 0.15p/kWh on gas. In the 2006 budget it was announced that the levy would in future rise annually in line with inflation, starting from April 1, 2007 [1]. With effect from 1 April 2009 (there was no change in 2010) the rates are^[1]:

Electricity	0.470p per kWh
Mains Gas	0.164p per kWh
LPG	1.050p per kg
Any other "taxable commodity"	1.281p per kg

A reduction of up to 80% from the levy may be gained by energy-intensive users provided they sign a Climate Change Agreement.

Revenue from the levy was offset by a 0.3% employers' rate reduction in National Insurance. However, the 2002 Finance Act subsequently increased that rate by 1%, reversing the reduction. Part of the revenue is used to fund a number of energy efficiency initiatives, including The Carbon Trust.

The Climate Change Levy effectively replaced the Fossil Fuel Levy.

See also

• Ecological tax reform
• Energy policy of the United Kingdom
• Energy use and conservation in the United Kingdom
• United Kingdom Climate Change Programme
• Renewables Obligation

Further reading

• House of Commons Environmental Audit Select Committee (February 19, 2008). "Reducing Carbon Emissions from UK Business: The role of the Climate Change Levy and Agreements". UK Parliament website. http://www.publications.parliament.uk/pa/cm200708/cmselect/cmenvaud/354/35402.htm. Retrieved August 30, 2009. 

• • "Reducing Carbon Emissions from UK Business: The role of the Climate Change Levy and Agreements: Government Response to the Committee's Second Report of Session 2007-08". May 20, 2008. http://www.publications.parliament.uk/pa/cm200708/cmselect/cmenvaud/590/59002.htm. Retrieved August 30, 2009. 
• Pearce, D. (2005). "The United Kingdom Climate Change Levy: A study in political economy". OECD Environment Directorate, Centre for Tax Policy and Administration. http://www.olis.oecd.org/olis/2004doc.nsf/LinkTo/NT00009492/$FILE/JT00179396.PDF. Retrieved January 21st, 2010. 

External links

• HMRC - Climate Change Levy in depth

References

1. ^ HMRC Reference: CCL Info Sheet 01/09