Future changes to the Climate Change Levy (CCL)
The Climate Change Levy (CCL) and the Carbon Reduction Commitment (CRC) are two energy consumption taxes currently levied to encourage businesses to consume energy more efficiently.
The announcement was made in the 2016 Spring Budget that the CRC scheme would close with effect from the end of the 2018 / 2019 scheme year.
Non-domestic customers currently participating in the CRC scheme will be required to submit their last CRC report by July 2019 and to surrender allowances for the last time in October 2019.
To compensate for the reduction in taxation revenue created by the abolition of the CRC scheme, the CCL will increase from April 2019. While CCL rates have previously increased by less than 3% annually in line with RPI, the year on year increase planned to take effect on April 1st 2019 will be 45% for electricity and 67% for gas.
The CCL rates from April 2020 to March 2021 are £0.00847/kWh for electricity and £0.00339/kWh for gas. New CCL rates from 1st April 2021 will be £0.00775/kWh for electricity and £0.00465/kWh for gas.
Customers active in energy intensive industries may be eligible for receipt of a 90% discount on CCL electricity rates and 65% on CCL gas rates by entering into a Climate Change Agreement (CCA) with the Environment Agency. This will continue after 2019. A CCA is a voluntary agreement by the customer to reduce energy usage and CO² emissions. Once the CCA is in place, the customer will report its energy usage and carbon emissions against agreed targets over a two-year target period. If it then meets the targets at the end of each reporting period, the relevant discount or discounts can be claimed back. Umbrella agreements are in place for certain energy intensive industries or a customer can individually negotiate an underlying agreement with the Environment Agency.
Charities and businesses which consume very small (de minimis) amounts of energy are exempt from CCL. The current de minimis level for electricity is 1,000 kWh per month and that for gas is 4,397 kWh per month.