CCL Increase: A Reminder

Looking ahead to the next financial year, one of the cost changes to allow for is the increase to the Climate Change Levy (CCL). The CRC Energy Efficiency Scheme will end in 2019, and the government will replace the income stream to the Treasury via an increase to CCL, as follows:

CCL Rates

Chart 1
Non-CRC Participants will see a significant increase from April 2019 unless they claim other CCL exemptions. For example, Climate Change Agreements (CCAs) are voluntary agreements available to energy-intensive industries in certain sectors, such as the chemicals sector. In return for meeting energy efficiency targets, these industries secure a CCL discount on their eligible energy use. The current CCA scheme is now closed to new entrants, but for those with a CCA in place, the discount will increase from April 2019 as follows:The year-on-year increase is significant, equating to a 45% increase to CCL for electricity and a 67% increase for gas. The higher increase to the gas rates is a step by the government to rebalance the ratio between electricity and gas as the generation mix for electricity becomes less carbon-intensive. The intention is for the ratio to be 1:1 by 2025.

Percentage discount for holders of a CCA

Chart 2
An exemption from CCL can also be claimed for energy used in mineralogical or metallurgical activities (as defined by HMRC), often referred to as the Min/Met exemption. Other exemptions are in place, for example for some charities and for businesses that consume negligible quantities of energy.

The final CRC year runs from April 2018 to March 2019, with the final payment for buy-to-comply allowances due in September 2019. The reporting element of the CRC will be replaced by the new Streamlined Energy and Carbon Reporting (SECR), also to be introduced from April 2019.

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