Greener Now information on The Climate Change Levy
The climate change levy is a tax on the use of energy in industry, commerce and the public sector, with offsetting cuts in employers' National Insurance Contributions - NICs - and additional support for energy efficiency schemes and renewable sources of energy.
The levy forms a key part of the Government's overall Climate Change Programme. The basic design of the levy follows the recommendations made in Lord Marshall's report Economic Instruments and the Business Use of Energy, published in October 1998.
The levy will play a major role in helping the UK to meet its targets for reducing greenhouse gas emissions. It entails no increase in the tax burden on industry as a whole and no net gain for the public finances.
The reforms are intended to promote energy efficiency, encourage employment opportunities and stimulate investment in new technologies.
The purpose of the levy is to encourage the efficient use of energy, not to raise tax. Consequently, the Government has put in place a range of measures to assist energy users to improve their energy efficiency.
In brief the Climate Change Levy measures are as follows:
- Action energy.
- An energy efficiency fund.
- A system of 100% first year capital allowances for energy saving investments by the private sector.
- An exemption from the levy for electricity generated from 'new' renewable.
- An exemption from the levy for the fuel input to 'good quality' combined heat and power.
Businesses will also benefit from schemes aimed at promoting energy efficiency and stimulating the take-up of renewable sources of energy, e.g. solar and wind power.
£50 million per annum of revenue will be allocated to these schemes - a major increase from current levels of funding. There is also a scheme of 100% first year capital allowances for certain energy saving investments.
