2. Climate change levy

Climate change levy (CCL) is made up of 2 rates: the main rates and the carbon price support (CPS) rates.

Main rates

Fuels liable to the main rates of CCL are:

  • electricity
  • gas
  • solid fuels - like coal, lignite, coke and petroleum coke

The CCL main rates are listed on your business’ energy bill.

You can find out more information and detail on the rates at HMRC.

Who it applies to

You pay the main rates of CCL if your business is in one of the following sectors:

  • industrial
  • commercial
  • agricultural
  • public services

You don’t pay CCL if you’re:

  • a business that uses small amounts of energy
  • a domestic energy user
  • a charity engaged in non-commercial activities

Getting an exemption

Electricity, gas and solid fuel are normally exempt from the main rates of CCL if:

  • they won’t be used in the UK
  • they’re supplied to or from certain combined heat and power (CHP) schemes registered under the CHP quality assurance (CHPQA) programme
  • the electricity is generated from renewable sources
  • they’re used to produce electricity in a generating station which has a capacity of 2MW or greater
  • they won’t be used as fuel
  • they’re used in certain forms of transport

There are also other exemptions and reliefs.

Pay a reduced rate

You can get a reduction on the main rates of CCL if you’re an energy intensive business and have entered into a climate change agreement (CCA) with the Environment Agency.

Energy intensive businesses can get a 90% reduction for electricity and a 65% reduction for gas, LPG, coal and other solid fuel.

Find out more about CCAs and check if your business is eligible to apply. Your industry trade association can also give advice.

Carbon price support (CPS) rates

The CPS rates of CCL encourage industry to use low carbon technology for producing electricity.

Fuels liable to the CPS rates of CCL are:

  • gas
  • liquefied petroleum gas (LPG)
  • coal and other solid fossil fuels

Who pays CPS

Owners of electricity generating stations and operators of combined heat and power (CHP) stations pay the CPS rates of CCL.

Certain suppliers do not have to pay CPS. These include small generators, stand-by generators and generating stations in Northern Ireland.

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