Business Energy Glossary
What is the Climate Change Levy (CCL)?
Pick up a business energy bill and look for a line marked “Climate Change Levy” or “CCL”. It sits there quietly, between the unit rate and the VAT line, adding to the total without much fanfare. CCL is a UK tax on non-domestic energy use, charged in pence per kWh on top of the energy itself. It has been on bills since April 2001. Most businesses pay the main rate without thinking about it — but a meaningful minority qualify for a 5 per cent VAT route (with no CCL) or for the much-reduced rate under a Climate Change Agreement, and never claim it.
CCL is a pass-through cost on most non-domestic business electricity and business gas bills. It’s part of the wider compliance picture across business energy contracts.
CCL is the kind of line item most business owners glance over without really understanding. It is small per kWh but adds up across the bill — around 6 to 8 per cent of a typical business electricity bill at current rates. This entry covers what CCL actually charges, who pays, who qualifies for the reduced or zero rates, and where it shows on the bill. For the comprehensive guide including exemption routes, see the Clearsight CCL guide.
On this page
What CCL actually charges
CCL is a tax on the supply of energy to non-domestic users. It is charged per kWh on:
- Electricity supplied to non-domestic premises.
- Gas supplied to non-domestic premises.
- Solid fuel and LPG supplied to non-domestic premises.
The supplier collects CCL on each bill and remits it to HMRC. The customer does not pay HMRC directly; they pay it through the bill, with the line clearly labelled. CCL is added before VAT, so VAT is calculated on the bill total including the CCL element.
Current CCL rates
HMRC publishes the rates each year, taking effect on 1 April. Rates as of 1 April 2025:
| Fuel | Main CCL rate | CCA reduced rate |
|---|---|---|
| Electricity | 0.775 p/kWh | 0.0620 p/kWh (92% reduction) |
| Gas | 0.775 p/kWh | 0.0853 p/kWh (89% reduction) |
| LPG | 2.175 p/kg | 0.4133 p/kg (81% reduction) |
| Solid fuel (coal, coke) | 6.064 p/kg | 0.7136 p/kg (88% reduction) |
Historically, gas CCL was set at half the electricity rate. Rates converged in 2019 as part of the policy shift towards electrification — pushing the relative cost of gas closer to electricity in support of low-carbon heat. The main rate is reviewed each Budget and confirmed in the spring Finance Bill.
Who pays CCL
CCL applies to taxable supplies, defined broadly as energy supplied to any non-domestic user. In practice this covers:
- Businesses of every size and sector.
- Public sector buildings (councils, schools, hospitals).
- Mixed-use sites for their non-domestic portion.
- Most charities and not-for-profits.
Exclusions are tightly defined and the burden of proof sits with the customer to demonstrate eligibility. Suppliers default to charging the main rate; reduction or removal happens through specific certifications.
Who is exempt
Three main routes to a zero rate of CCL on a supply:
- De minimis. Very low consumption sites (below specific thresholds: 4,397 kWh/month for electricity, 4,397 kWh/month for gas) qualify for 5 per cent VAT instead of 20 per cent — and crucially, no CCL.
- Qualifying use. Energy used for charitable, non-business purposes (typical of pure charities not engaged in trade) is outside the scope of CCL.
- Domestic use. Energy supplied for use in a domestic context (residential property) is not CCL-eligible. Care homes, student accommodation and other quasi-residential premises typically qualify.
Each route requires the customer to submit a VAT 1166 / PP10 / PP11 certificate to the supplier confirming the qualifying use. Backdated relief is available, typically four years.
Climate Change Agreements (CCA)
The Climate Change Agreement scheme provides large reductions on CCL for energy-intensive sectors that commit to specific energy efficiency targets. Key features:
- Run by the Environment Agency in partnership with sector trade associations.
- Coverage limited to defined energy-intensive sectors (cement, glass, steel, ceramics, food processing, chemicals and others).
- Reduction of 92 per cent on electricity CCL and 89 per cent on gas CCL for participating sites.
- Sites must meet biennial energy efficiency targets to retain the reduction.
- Significant reporting and audit requirements; mid-size firms often choose not to engage despite eligibility because the admin overhead is material.
The CCA scheme is regularly reviewed and the precise rates and rules change between phases. For sectors that genuinely qualify, the CCA can be worth hundreds of thousands of pounds annually.
How CCL appears on the bill
CCL is shown as a distinct line on the bill, separate from the energy itself:
- Labelled “Climate Change Levy” or “CCL”.
- Calculated as kWh used × CCL rate.
- Added to the bill subtotal before VAT.
- The VAT line is then calculated on the subtotal (including CCL).
A bill showing 50,000 kWh of electricity at the 2025 rate (0.775 p/kWh) carries a CCL charge of £387.50. The same supply of gas at 100,000 kWh shows £775.00 of CCL. These are not trivial sums across an annual bill.
CCL vs VAT vs other carbon costs
CCL is one of several UK policy costs on business energy bills. To keep them straight:
| Cost | What it is | How it shows |
|---|---|---|
| CCL | Energy tax on non-domestic supply | Separate line, p/kWh × kWh |
| VAT | Value Added Tax on the whole bill | Percentage on subtotal (5% or 20%) |
| Carbon Price Support (electricity) | Tax on fossil generation, passed through | Bundled into wholesale unit rate |
| UK ETS (large generators) | Emissions trading, passed through | Bundled into wholesale unit rate |
| RO, CfD, Capacity Market | Renewable and capacity policy costs | Bundled into unit rate or separately shown |
Bills that label every policy cost separately are more transparent; bills that bundle them into the unit rate are simpler but harder to interrogate. Most UK suppliers now show CCL separately by default. VAT on business energy is covered in its own entry.
Managing CCL exposure
For most businesses CCL is fixed at the main rate and the only practical lever is consumption — using less means paying less. For energy-intensive businesses with serious scale, three options matter:
- Check VAT/CCL certification. Sites with qualifying use may be eligible for 5 per cent VAT and no CCL. Many businesses miss this and pay both unnecessarily.
- Assess CCA eligibility. If the business sits in one of the defined sectors, the CCA can deliver 89 to 92 per cent CCL reduction. Worth the admin overhead at scale.
- Reduce consumption. Efficiency, on-site generation and process improvements all reduce CCL alongside the underlying energy cost. CCL is a multiplier on consumption, so the same percentage saving compounds.
For a fuller treatment including step-by-step exemption application advice, see the Clearsight CCL guide. Related concepts in the glossary: VAT on business energy, the EII scheme, Climate Change Agreements.
the Climate Change Levy (CCL) FAQs
What is the Climate Change Levy?
A UK tax on non-domestic energy use, applied to business gas, electricity, solid fuel and LPG bills as a separate p/kWh charge. CCL was introduced in 2001 and has rates set annually by HMRC.
How much is CCL?
From 1 April 2025: 0.775 p/kWh on electricity and gas; 2.175 p/kg on LPG; 6.064 p/kg on solid fuel. CCA reduced rates apply for participating energy-intensive sectors.
Who pays the Climate Change Levy?
All non-domestic energy users by default, including businesses, public sector, charities and not-for-profits, unless they qualify for an exemption or reduction. Suppliers collect CCL via the energy bill and pay HMRC.
How can I avoid paying CCL?
Three routes: very low consumption (de minimis) qualifies for 5 per cent VAT and no CCL; qualifying charitable or non-business use is outside CCL; and a Climate Change Agreement (CCA) provides 89 to 92 per cent reduction for energy-intensive sectors.
What is a Climate Change Agreement?
A scheme run by the Environment Agency offering 89 per cent CCL reduction on gas and 92 per cent on electricity for energy-intensive sectors that commit to biennial efficiency targets. Sectors include cement, glass, steel, chemicals and several others.
Is CCL the same as VAT?
No. CCL is a separate energy tax in p/kWh. VAT is a percentage tax on the bill total. Both can apply to the same bill: CCL is added to the subtotal, then VAT is calculated on the subtotal including CCL.
Are domestic bills subject to CCL?
No. CCL applies only to non-domestic supplies. Energy used in homes is outside CCL, and domestic bills carry 5 per cent VAT rather than 20 per cent.
How is CCL shown on the bill?
As a distinct line on the bill labelled “Climate Change Levy” or “CCL”, calculated as kWh × CCL rate. The CCL value is added to the bill subtotal before VAT is calculated.
Did CCL change in April 2019?
Yes. Gas CCL was previously set at around half the electricity rate. In April 2019 the rates were brought close to parity (with gas rising and electricity falling), reflecting the policy shift towards electrification of heat.
Can I backdate a CCL exemption claim?
Yes, typically up to four years for de minimis and qualifying use claims, on submission of the appropriate VAT 1166 / PP10 / PP11 certificate to the supplier. Refunds are processed through the supplier rather than HMRC directly.
How does CCL compare to other countries?
CCL is broadly analogous to industrial energy taxes in Germany (Strom- und Energiesteuer), the Netherlands (Energiebelasting) and other EU jurisdictions. Rates and exemption structures differ but the policy intent (using tax to discourage non-domestic energy use) is similar.
What is the de minimis threshold for CCL?
Around 4,397 kWh per month for both gas and electricity (33 kWh per day). Sites below this threshold qualify for 5 per cent VAT and no CCL. The threshold is set in HMRC guidance and indexed periodically.