What is the Climate Change
Levy?
The Kyoto Summit on Climate Change in 1997
prompted a reduction in greenhouse gas levels, not only on a worldwide
scale but in the UK itself. The EU signed up to an agreement which
aimed to reduce Greenhouse Gas Emissions by 8% by the year 2010,
using 1990 levels as the baseline. Within this, a commitment was
made to reduce UK levels by 12.5% in the same timeframe. In short,
the main aim was to encourage the UK industry to use less energy.
The domestic market was earmarked for a 20% reduction in emissions
within the UK – a target well in excess of that suggested
by the Kyoto Summit.
The implementation of ‘Climate Change Levy’ was in
April 2001 for all UK industries. The basic incentive to be proactive
on the scheme was to dramatically increase tax on fossil fuels by
way of Levies, shifting taxes away from areas such as employment.
This would encourage innovation in meeting higher standards of the
environment.
Climate Change Levy (CCL for short) is charged on all energy supplied
not only to commercial and industrial users, but also to agriculture,
public administration, and other services. The actual payment of
the CCL is from the supplier to customs and excise.
The actual companies pay the levies through their utility bills
to the supplier. The CCL is a non-profit item, and as such is fixed
by utility, as follows:
Electricity
0.43 p/kWh
Gas
0.15 p/kWh
Liquid Petroleum Gas (LPG)
0.07 p/kWh
Coal/lignite
1.17 p/kg (approximately 0.15 p/kWh)
If your business is subject to particularly competitive rates within
energy buying, you will experience a greater percentage increase
on your utility bills.
The obvious conclusion to draw from the headline charges is that
much of the energy content of fossil fuels used to generate the
electricity is lost in the processes of combustion, transmission
and distribution across the ‘grid’. Notable absentees
from the list are petrol, diesel, mineral oils, waste and any major
renewable energy sources.
It is clear to see that renewable sources, then, are attractive
to both supplier and consumer, as they act as a far cleaner and
far more cost effective source of power.
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