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Navigating the Climate Change Levy: A Comprehensive Guide for Businesses

The Climate Change Levy (CCL) is a commercial tax payment introduced by the UK government in 2001. The levy is aimed at encouraging businesses to reduce their energy consumption and head towards more sustainable work practices. As the government focuses on addressing the impact of climate change, more initiatives like the CCL will likely emerge as part of the collective strategy towards the aim of a carbon-neutral economy by 2030.

The Climate Change Levy drives businesses toward taking direct action to reduce their greenhouse gas emissions. This means looking directly at business operations and making charges on taxable commodities supplied for lighting, heating, electricity and other elements that power businesses.

CCL is applied to taxable commodities like electricity, coal or natural gas and is applied to all businesses except charities and not-for-profit organisations. Those who pay a reduced VAT rate and those whose energy usage is below minimal limits are exempt from the Climate Change Levy charge.

How is the CCL charged?

The charge is calculated per kilowatt hour of energy used, which is subject to change over time. It is the business energy suppliers who are responsible for placing and collecting charges from the energy user, as they are the suppliers of the taxable commodity. Customers will see the charge as a separate fee on their energy bill from their energy supplier. From here, HMRC collects the CCL charge from the energy supplier.

What are the current Climate Change Levy rates?

There are two different rates to consider, these are the main rates and the carbon price support rates.

Carbon rates apply to those who own an electricity generating station or operate a combined heat and power station. The current main rates and carbon rates are listed below:

Main rates

How can you manage the Climate Change Levy?

There are a few ways for businesses to manage and reduce their CCL charge and improve their green energy credentials at the same time.

Becoming more efficient with your energy usage is an effective way to reduce your energy and CCL costs; this will help reduce the overall financial impact of the CCL and demonstrate that the business has taken steps towards more energy-efficient business practices, boosting its sustainability profile.

Ways to manage your energy use include:

  • Track your energy use monthly by checking your energy meter.
  • Install energy-efficient appliances across sites.
  • Check your eligibility for the Climate Change Agreements (CCA) scheme.

What is the Climate Change Agreements scheme?

CCA is a scheme which is administrated by the Environmental Agency and will run until 31st March 2025. Climate Change Agreements are a voluntary agreement that reduce the use of energy and carbon dioxide emissions administered by the UK industry and the Environment Agency.

By creating one of those agreements, operators are eligible for a discount on the CCL. Paying the reduced CCL rate means you will be required to make changes to your business’ energy efficiency and begin lowering your energy consumption. This will mean recording and reporting the necessary information, such as energy usage and carbon dioxide emissions over a two-year period.

Businesses that have made a CCA commitment will have a 90% reduction in the CCL cost added on an electricity bill, as well as 65% on all other fuels. If you meet all the targets set for reductions at the end of each term, you will remain eligible for the Climate Change Levy discount.


The climate change levy doesn’t directly affect businesses, but it is a regular charge on your energy bills. Keeping an eye on how the CCL rates change and how your energy usage fluctuates will be imperative if you want to reduce CCL associated costs on your energy bill. Amber has a dedicated energy management service that helps you to reduce costs, consumption and carbon.

Contact us to find out how we might help you with your energy needs.

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