Climate Change Levy - Legislation

At the International Climate Conference in Kyoto (1997) all the developed countries present agreed a legally binding commitment to reduce greenhouse gas emissions to 5.2% below 1990 levels over the period 2008-2012.

The EU member states collectively agreed to reduce emissions by 8%, with the UK's contribution set at 12.5%.

The UK has set itself a further target to reduce Carbon dioxide emissions by 20% on 1990 levels by 2010.

A key element in the Governments strategy to meet their commitments to reducing global greenhouse gas emissions is The Climate Change Levy (CCL).

The government expects the levy to cut CO2 emissions by 2.5 million tonnes of carbon a year by 2010 and raise £1 billion in its first year

The levy, which came into force in April 2001, is a tax on energy use by UK businesses. It is intended to encourage the efficient use of energy, stimulate investment in energy saving equipment and encourage employment opportunities.

The Government insists that the levy will not increase the tax burden on industry, as it will be offset against cuts in the rate of employers' National Insurance Contributions (NICs) of 0.3%.

The levy will not apply to:

	Fuels used by the domestic or transport sector
	Fuels used to generate other forms of energy
	Renewable energy (e.g. Windpower)
	Fuels used by certified combined heat and power schemes
	Fuels used jointly as a feedstock and an energy source within the same process
	Electricity used in the electrolysis process
	Natural Gas in Northern Ireland

Will the levy affect me?

The energy usage tax will affect UK businesses across industry, commerce and agriculture as well as the public sector.

Is anyone exempt?

The levy will not apply to:

	Domestic energy use
	Energy used by registered charities
	Small firms that use the equivalent of a domestic (de minimis) amount of energy

Special consideration will be given to energy intensive industries. The government will provide a discount on the levy of 80% to those sectors that agree to targets for improving energy efficiency or reducing carbon emissions.

Assistance will also to be given to Horticulture companies to help improve energy efficiency. This will include a temporary levy discount of 50% for up to 5 years.

How will the levy be applied?

The levy will be added to energy bills before VAT.

How do I claim for relief?

To claim relief from the levy you need to provide your energy supplier with a supplier certificate which will be available online from the HMCE website.

Can I apply for financial Assistance?

1. The Carbon Trust

The Carbon Trust is an independent not for profit company established by the Government to promote the development of low carbon technologies and support the transition to a low carbon technology in the UK.

£50 million pounds per year has been made available for schemes aimed at promoting energy efficiency and the use of renewable sources of energy.

For further information visit the Carbon Trust website

2. Enhanced Capital Allowance Scheme (ECA)

The Carbon Trust also manages the ECA scheme that receives funding of £100m a year. The scheme allows businesses to claim tax relief on qualifying energy saving investments.

In the first year companies are be able to claim 100% relief resulting in a reduction in the tax bill for the year in which the investment was made.

For Further information visit the ECA website

HMCE: Information regarding climate change levy rates, payments, registration, VAT rates etc. can be found in Notice CCL2 An introduction to climate change levy on the HMCE website.

Or phone HM Customs and Excise Climate Change Levy Helpdesk

tel:	0845 010 9000

DEFRA produce a range of background documents to the CCL that are available online at The DEFRA website

Or you can contact the Government funded Action Energy (formerly Energy-Efficiency Best Practice Programme)

Integrated Pollution Prevention Control Directive (EC/61/96)

The IPPC system is intended to give an integrated environmental approach to the regulation of certain industrial processes.

Industries (installations) covered by the directive are required to prevent, or where that is not practicable, reduce emissions to air, water and land.

As part of the directive installations are required to take all practicable measures (with particular reference to the use of Best Available Techniques (BAT)) to make sure that they operate in an energy-efficient manner.

The directive is enacted in England and Wales through the Pollution, Prevention and Control (PPC) regulations that are enforced by The Environment Agency.

PPC regulations require that all installations falling under the scope of the IPPC shall:

Meet a set of defined baseline standards for energy efficiency

Meet additional energy requirements either through participation in a domestic CCL or trading agreement with the UK government or through compliance with further installation-specific requirements as determined and regulated by the competent authority.

Links to Further Information

Environment Agency - IPPC Guidance Homepage

DEFRA - Integrated Pollution, Prevention Control: A Practical Guide