The Climate Change Levy

Introduced on 1st April 2001, the Climate Change Levy (CCL) is in effect an energy tax on non-domestic, non-transport consumers. Its aim, as part of the UK Climate Change Programme, is to reduce carbon emissions; in this case the CCL has the explicit goal of 2.5million tonnes of CO₂ annually by 2010. The tax is worth 0.47p/kWh, but any renewable or approved co-generated electricity is exempt. Confusingly, electricity from nuclear energy is taxed, even though it contributes no direct carbon emissions from generation.

The CCL was designed to be revenue neutral, so organisations suffering the CCL had their national insurance contributions dropped by 0.3% in 2001 (however this was immediately rebutted by a 1% increase the following year).

Climate Change Agreements

When the CCL was put in place, to keep the UK attractive for international business, special provisions had to be made for energy intensive sectors. The ten main sectors are:

• aluminium,
• cement,
• ceramics,
• chemicals,
• food & drink,
• foundries,
• glass,
• non-ferrous metals,
• paper,
• steel

If organisations within these sectors can negotiate with the government real targets for energy efficiency and/or emissions reduction, then the CCL is reduced by 80%.