climate levy

Climate Change Levy

In an aim to encourage energy efficiency, the government introduced a tax on energy called the Climate Change Levy which came into effect on 1 April 2001. The Levy is intended to help meet the UK's target for reducing greenhouse gas emissions set by the Kyoto Protocol on climate change.

How will it Affect Me ?

The Levy is charged on energy used in industry, commerce, and the public sector although it does not apply to forms of transport. The amount of Levy is expressed in pence per unit of measured consumption and is collected by suppliers on behalf of HM Customs & Excise.

Reductions and Exemptions

The Levy is not charged on domestic energy use. There are also complete and partial exemptions for some categories of Business use:

• If you are eligible for the lower rate (5%) of VAT on energy
• If a proportion of consumption is for domestic or residential use
• Consumers using less than 33 kWh of electricity or 145 kWh of gas a day
• Non-business use by Charities – including Voluntary Aided, Controlled and Foundation schools, and City Technology Colleges

Other exemptions have also been introduced for Energy Intensive Users and Horticultural use. Energy from renewable sources such as wind power, and energy for us in good quality CHP plant that satisfy quality standards, are also exempt from the Levy.

How Much Does it Cost ?

The Levy is currently charged as a rate per unit, with different levies for each form of energy:

gas	0.154 pence/kWh
electricity	0.441 p/kWh
coal	£12.01/tonne
LPG	£0.00985/Kg

The increased cost of energy as a result of the Levy is seen by the Government as an important incentive for consumers to take measures to reduce their consumption.