Climate Change Levy

Climate Change Levy is a levy which has been applied to the cost of energy consumed for lighting, heating and power by businesses and industry since April 2001.

Under the Kyoto/Burden Sharing Agreement, the UK is required to cut greenhouse gas emissions by 12.5% in the period 2008-12 compared to the 1990 base year. The Climate Change Act 2008 goes beyond this to set a legally binding target of an 80% reduction in greenhouse gas emissions from 1990-2050. It also established the independent Climate Change Committee to advise on setting 5-year Carbon Budgets. An interim target has been set of a 34% reduction from 1990-2020 and will increase to 42% if a significant international agreement is secured.

What Commodities are Taxable?

Who Will Benefit from Reduced Levy Taxation?

The following commodities will have the levy applied:

Electricity
Gas supplied by a Gas Utility
Petroleum and Hydrocarbon Gas in a Liquid State
Coal and Lignite
Coke, and Semi-Coke of Coal or Lignite
Petroleum Coke

Who Will be Exempt from the Levy?

Domestic Customers
Some Communal Residential
Accomodation
Certain Education Establishments
Specific Health Care Premises
Good Quality CHP Schemes
Energy Supplied from a Qualifying Renewable Source

The following industries:

Horticultural producers

Cement

Chemicals

Non-Ferrous Metals

Steel

Aluminium

Ceramics

Foundries

Paper

The reductions vary and can be as much as up to 80% relief.

Will There be any Benefits to Offset the Levy?
The government announced that with effect from 1st April 2008, in conjunction with the CCL, Employers National Insurance.

Contributions will reduce by 0.3%.
It is therefore possible to benefit financially from the levy if you have a business with low energy consumption and a high staffing level.

What Will the Levy Rates Be?

	Old Rate	New Rate
Electricity	0.456 pence per kWh	0.470 pence per kWh
Gas	0.159 pence per kWh	0.164 pence per kWh
Petroleum Gas or Other Gaseous Hydrocarbon supplied in a Liquid State	1.018 pence per kilogram	1.050 pence per kilogram
Any Other Taxable Commodity	1.242 pence per kilogram	1.281 pence per kilogram

These taxes will on average increase each of your energy bills by between 10% and 15%.

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