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.
