Climate Change Levy (CCL) exemptions explained

The Climate Change Levy (CCL) is an environmental tax that encourages businesses to reduce their energy consumption. This article provides guidance for eligible businesses who are looking to apply for exemption from the CCL through Energy Tax Relief.

What does CCL mean?

CCL stands for Climate Change Levy, an environmental tax charged on energy used by businesses in the UK. According to the Environment Agency, the tax covers “electricity, gas, petroleum gas, coal, lignite, coke, semi-coke and petroleum coke (but not mineral oils) used as fuels by non-domestic energy users.”

Exemptions are available for businesses in the manufacturing and transport sectors, as well as large domestic users. Companies that fall into these categories can partially or fully exempt their energy supplies from CCL charges.

Why was the Climate Change Levy introduced?

The Climate Change Levy on energy was created in the UK in April 2001, following the UK Government’s Finance Act 2000. The levy was seen as a way of helping reduce greenhouse gas emissions and combat climate change. It encourages businesses to reduce energy consumption so that they can operate in a more efficient and environmentally friendly way. The tax was originally used to fund green initiatives, but since 2010 no longer directly funds initiatives to mitigate climate change.

What exemptions are there for the Climate Change Levy (CCL)?

The UK Government lists several exemptions from the costs of the Climate Change Levy (CCL). The key exemptions include:

For supplies used in some forms of transport
For use in metallurgical and mineralogical processes
For business with a Climate Change Agreement
For Domestic and charitable non-business use
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Generally, these exemptions apply to a wide range of manufacturing and transport industries (see below for more information).

What metallurgical and mineralogical processes are exempt from the Climate Change Levy (CCL)?

Examples of processes that qualify for mineralogical exemption include the manufacturing of:

Flat glass
Hollow glass
Glass fibres
Other glass, including technical glassware
Refractory products
Ceramic tiles and flags
Bricks, tiles and construction products, in baked clay
Ceramic household and ornamental articles
Ceramic sanitary fixtures
Ceramic insulators and insulating fittings
Other technical ceramic products
Other ceramic products
Cement
Lime and plaster
Concrete products for construction purposes
Plaster products for construction purposes
Ready-mixed concrete
Mortars
Fibre cement
Other articles of concrete, plaster and cement
Cutting, shaping and finishing of stone
Abrasive products
Other non-metallic mineral products

Examples of processes that qualify for metallurgical exemption include:

Manufacture of basic iron and steel and of ferro-alloys
Manufacture of tubes, pipes, hollow profiles and related fittings, of steel
Manufacture of other products of first processing of steel
Precious metals production
Aluminium production
Lead, zinc, tin and copper production
Other non-ferrous metal production
Casting of iron and steel
Casting of light metals
Casting of other non-ferrous metals
Forging, pressing, stamping and roll-forming of metal
Powder metallurgy
Treatment and coating of metals

What exemptions from the Climate Change Levy (CCL) are there for supplies used in transport?

Supplies used in some forms of transport are exempt from the main rate of CCL, if they are used to:

Electrify train lines
Power a ferry or non-railway vehicle transporting passengers
Light a railway carriage transporting passengers
Light the cab interior of a freight train transporting goods
Light a marine freight vessel (e.g., a ship on a journey outside UK waters)

What are Climate Change Agreements (CCAs)?

Climate change agreements (CCAs) are voluntary agreements between eligible UK businesses in energy-intensive industries and the Environment Agency.

Businesses with CCAs receive financial relief on the Climate Change Levy, as long as they achieve energy and carbon efficiency targets.

How long will the UK Government run Climate Change Agreements (CCAs)?

The UK recently extended the CCA scheme, announcing that the scheme will be available until March 2025.

No decisions have yet been made on any future CCA scheme, however the UK Government is assessing the possibility of a long-term scheme following the recent extension.

What exclusions are there for the Climate Change Levy (CCL)?

The UK Government also lists several excluded supplies from the costs of the Climate Change Levy (CCL). The exclusions include:

Domestic users
Small (de minimis) limits for businesses
Supplies to charities
Business premises used partly for domestic or non-business charity
Intermediaries (e.g., supplies to a tenant via a landlord)
Community heating schemes
Visiting forces

What are the Climate Change Levy rates?

From 1 April 2022, the Climate Change Levy was 0.775p per kWh for electricity and 0.568p per kWh for gas. From 1 April 2023, the levy on electricity will remain the same, while the levy on gas will increase to 0.672p per kWh.

What reductions on the main rates of CCL do businesses receive?

Previously, sectors with an umbrella agreement could receive an exemption from these taxes by signing a Climate Change Agreement (CCA), getting a percentage of their costs in tax relief.

Businesses with a CCA can receive:

86% reduction for gas
92% reduction for electricity
77% reduction for liquefied petroleum gas (LPG)
86% reduction for coal and other solid fossil fuels

How can my business apply for Energy Tax Relief?

Our Energy Team has a wealth of experience in successfully helping eligible businesses receive the Energy Tax Reliefs that they’re entitled to.

We offer an end-to-end consultation service: we’ll put together your entire claim, handle all the administration and submit your completed application to the government.

Get in touch, and we’ll give you an estimate of your energy tax savings.