Carbon Management Software, Carbon Accounting Software | ManageCO2
Climate Change Agreement (CCA)
The Climate Change Levy (CCL) was introduced on the 1st of April 2001 as a key part of the Governments overall climate change programme. It is a charge on energy usage for business and public sector and was introduced to encourage energy efficiency and reduce greenhouse gas emissions.
Who does it apply to?
The CCL applies to industrial and commercial energy supplies to the industrial, commercial, agricultural, public and service sectors. The taxable forms of energy include natural gas, electricity, petroleum and hydrocarbon gas in liquid form, coal, lignite and coke[1].
There are currently ten major energy intensive sectors and over thirty smaller sectors with agreements. The major sectors are:
- Aluminium
- Foundries
- Cement
- Glass
- Ceramics
- Non-ferrous metals
- Chemicals
- Paper
- Food and Drink
- Steel
|
|
|
|
|
|
|
|
|
|
Climate Change Agreements
To help energy-intensive organisations the Government negotiated the Climate Change Agreements (CCAs) in some sectors) which allow energy intensive organisations a discount on the levy if they achieve energy efficiency targets. These agreements initially gave organisations an 80% discount from the Climate Change Levy as long as they reach additional CO₂ reduction targets. The discount was reduced to 65% in April 2011, but will be increased to 80% again from April 2013 discount for firms which sign up to Climate Change Agreements (CCA). It was also announced in the March 2011 Budget that the tax breaks would be extended until 2023. The latest rates of the levy can be found on the HM Revenue & Customs website (link - http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&;;_pageLabel=pageExcise_InfoGuides&propertyType=document&id=HMCE_PROD1_027235)
The CCL has not led to higher taxes for industry as a whole and there is no net gain for public finances. The money raised from the levy to businesses is principally returning via a cut in the rate of employers' National Insurance by 0.3%[2].
Energy Efficiency measures
Several other measures have also been put in place to help businesses become more energy efficient[3]:
- 100% first-year capital allowances for energy-saving investments. Businesses making qualifying investments can deduct the full costs of these from their corporation tax or income tax bills. The Carbon Trust manages the Enhanced Capital Allowance scheme.
- An exemption from the CCL for electricity generated from 'new' renewables (such as solar power and wind power – but not large-scale hydro-electric schemes or some energy from waste)
- An exemption from the CCL for the fuel input to 'good quality' combined heat and power. This combined heat and power has to be verified by the CHP Quality Assurance Programme.
Carbon floor price
The Government announced in 2011 that it aimed to create a ‘carbon floor price’ which would mean that companies would pay a minimum price for carbon. The proposed price of approximately £16 per tonne would be significantly higher than the current price of between €6 and €7. The aim of this proposal is to encourage low carbon investment and increase energy efficiency.
[3] http://www.decc.gov.uk/en/content/cms/emissions/ccas/cc_levy/cc_levy.aspx
