CLIMATE CHANGE LEVY

Facts

Concern for the environment has been with us for a number of years and early discussions referred to global warming and the greenhouse effect.  Today, it is referred to as Climate Change.  Scientific opinion generally accepts that rising levels of greenhouse gas concentrations in the atmosphere will cause significant changes to global patterns.  In response to the scientific evidence and to pressure from environmental campaigners, climate change has moved from being a political issue to a business issue as Governments are increasingly implementing legislation that promotes positive environmental behaviour and penalises offenders.

Under the Kyoto protocol, developed countries have agreed that by 2008 to 2012, they will target reductions in CO2 emissions by an average of 5.2% below 1990 levels.  The UK’s target under this agreement is to achieve a 12.5% reduction in CO2 emissions by 2010.  The Climate Change Levy (CCL) is a key part of the Government’s climate change programme and a principal funding mechanism for the Carbon Trust, the government-backed company established to take the lead on moving to a low carbon economy.

Costs

The Climate Change Levy (CCL) is a tax on an energy use in industry, commerce, agriculture and the public sector.  It was introduced in April 2001. The tax will vary in its effect as some organisations are eligible for discount and some energy sources or users of energy are exempt.  All UK businesses and public sector organisations pay the levy via their energy bills.  The full rate of levy is:

0.43 p/k W h for electricity
0.15 p/k W h for gas
1.17 p/kilogram for coal
0.96 p/kilogram for LPG
Fuel oils do not attract the levy as they are already subject to excise duty

The CCL is currently accompanied by a 0.3% reduction in employers National Insurance contributions.