Climate Change Levy | Fox Energy

The history of the Climate Change Levy (CCL)

Historically, in the March 2016 Budget, it was announced that the Carbon Reduction Commitment (CRC) Energy Efficiency scheme would be abolished at the end of the 2018-19 compliance year. Consequently, the CCL became the UK’s sole carbon tax on energy bills.

To compensate for the loss of CRC revenue, the government significantly increased CCL rates from April 1, 2019. For example, electricity rates rose by 45% and gas rates by 67% from their 2018 levels. These increases, leading to an overall 48% rise for electricity and 70% for gas, were part of an effort to rebalance gas and electricity tax ratios, with a goal of achieving a 1:1 ratio by 2025.

Current Situation

(as of April 2024 onwards)

The rebalancing of gas and electricity CCL rates has progressed. As of April 1, 2024, the main CCL rate for natural gas has risen to match that of electricity, both standing at £0.00775 per kWh. These rates are set to increase further from April 1, 2026, to £0.00801 per kWh for both.

Exemptions

Certain businesses and energy uses are exempt from CCL, including:

Small energy users

Businesses consuming less than 33 kWh of electricity and/or 145 kWh of gas per day (or 12,000 kWh of electricity and 52,765 kWh of gas per year).

Charities

Those not engaged in commercial activities.

Domestic users

Energy supplied to homes, schools, and other residential accommodations.

Businesses with a Climate Change Agreement (CCA)

These are voluntary agreements where energy-intensive industries commit to energy efficiency and emission reduction targets in exchange for significant CCL discounts (currently 92% for electricity and 89% for gas), such as offered under TSA membership.

Specific uses

Energy used in some forms of transport, metallurgical and mineralogical processes, and self-generated low-carbon energy.

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Climate Change Levy (CCL) Reduction