What is the Climate Change Levy (CCL)? The Climate Change Levy (CCL) is a UK government tax introduced in 2001 to encourage businesses and the public sector to improve energy efficiency and reduce carbon emissions. Unlike RO , CfDs and FiTs , which fund renewable generation, CCL is a direct tax on energy consumption. CCL applies to the supply of electricity, gas and certain solid fuels used for non-domestic purposes. It is charged per unit of energy consumed, regardless of when or how that energy is used. The levy is administered by HMRC and is designed to create a price signal that incentivises lower energy use and investment in efficiency measures. Who pays the CCL? CCL is payable by non-domestic energy users, including businesses, charities and public sector organisations. Domestic consumers are exempt. Energy suppliers are responsible for collecting the levy and passing it on to HMRC, but the full cost is passed through to customers via energy bills, usually as a clearly identifiable line item. Some organisations may qualify for CCL relief or exemption, most notably: Businesses with a valid Climate Change Agreement (CCA) Certain energy-intensive processes Supplies generated from qualifying renewable sources How much is the CCL (and when are rates revised)? CCL rates are set by the government and are typically revised annually, usually taking effect from 1 April each year. Rates are published by HMRC in advance to allow suppliers to update billing. For both gas and electricity, CCL is charged on a pence per kilowatt hour (p/kWh) basis. The current CCL rates are 0.775p/kWh, set to rise to 0.801p/kWh from April 1st 2026, and then to 0.827p/kWh from April 1st 2027. Unlike RO or CfDs : CCL is not forecast or reconciled There is no recycling or levy adjustment The charge is fixed and unavoidable unless a formal exemption applies Why CCL matters for businesses Because CCL is a straight consumption tax, it directly rewards reduced energy use. Efficiency improvements, on-site generation, and CCA participation can all reduce CCL costs. This makes CCL one of the few policy costs that businesses can actively manage rather than simply absorb. If you would like to ensure your CCL charges have been invoiced correctly, contact us today and we can review your recent invoices to make sure you aren't paying more than necessary.

For many UK businesses, energy contracts can contain complex terms that aren’t always fully understood at the point of signing. One clause that often raises questions, is the take or pay clause . Understanding how this works is essential for avoiding unexpected costs and managing your energy procurement effectively. What is a take or pay clause? A take or pay clause is a contractual provision that requires a business to pay for a minimum level of energy consumption, regardless of whether that energy is actually used. In simple terms, you agree to “take” a certain volume of gas or electricity, or “pay” for it anyway. This clause is most commonly found in fixed energy contracts, particularly for larger commercial or industrial users, where suppliers price agreements based on forecasted consumption. How does it work in practice? When entering into a contract, your supplier will estimate your annual consumption based on historical usage data. This forms the basis of your agreed volume. The take or pay clause then sets a tolerance band -- often around 80–120% of expected usage. If your business consumes within this range, everything operates as expected. However, if your usage falls below the lower threshold, you may be charged for the shortfall. This means paying for energy you haven’t used. On the flip side, if you exceed the upper limit, additional units may be charged at a higher, non-contracted rate. Why do suppliers include take or pay clauses? Suppliers use take or pay clauses to manage risk. When they agree a fixed contract with your business, they typically purchase energy in advance based on your forecasted demand. If your usage drops significantly, they are left with surplus energy that must be resold -- often at a loss. The clause ensures that suppliers can recover these costs, which in turn allows them to offer more competitive pricing upfront. What are the risks for businesses? The main risk is overestimating your energy usage. If your operations change, you could fall below your contracted volume and face additional charges. There is also a financial planning risk. Businesses may believe they have secured a competitive rate, only to find that under-consumption penalties increase their effective cost per unit. How can you manage take or pay risk? The key to managing this clause is accurate forecasting and contract alignment. Reviewing historical consumption data, understanding operational changes, and factoring in growth or reduction plans are all critical steps before agreeing a contract. It’s also important to negotiate appropriate tolerance levels. Some suppliers offer more flexible bands, which can reduce the risk of penalties if your usage fluctuates. Regular monitoring throughout the contract is equally important. Identifying trends early allows you to take action. How an energy broker can help Take or pay clauses are a prime example of why energy procurement should go beyond simply comparing prices. At SeeMore Energy, we help businesses understand the full terms of their contracts -- not just the headline rates. We work with you to ensure your consumption forecasts are realistic, negotiate favourable contract terms, and match you with suppliers whose products align with your business profile. If you’re unsure whether your current contract includes a take or pay clause, or want to avoid unexpected costs in your next agreement, get in touch for a free, no-obligation review.