Climate change levy (UK)
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 1 April 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.
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 1 April 2007 . With effect from 1 April 2013 the rates are:
|Electricity||0.524p per kWh|
|Mains Gas||0.182p per kWh|
|LPG||1.172p per kg|
|Any other "taxable commodity"||1.429p per kg|
A reduction of up to 90% 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. The revenue used to fund a number of energy efficiency initiatives such as The Carbon Trust but this is no longer the case.
- Ecological tax reform
- Energy policy of the United Kingdom
- Energy use and conservation in the United Kingdom
- United Kingdom Climate Change Programme
- Renewables Obligation
- House of Commons Environmental Audit Select Committee (19 February 2008). "Reducing Carbon Emissions from UK Business: The role of the Climate Change Levy and Agreements". UK Parliament website. Retrieved 30 August 2009.
- Pearce, D. (2005). "The United Kingdom Climate Change Levy: A study in political economy". OECD Environment Directorate, Centre for Tax Policy and Administration. Retrieved 21 January 2010.