You’re probably aware that governments and businesses are coming under increasing amounts of pressure to become more energy efficient, and switch to renewable forms of energy.
The Climate Change Levy (CCL) is one of the ways in which the UK Government has been taking steps towards the goal of significantly reducing carbon emissions. We’ve compiled a guide that will help clear up any queries you have about the CCL; who it’s for and how it works.
Introduced in April 2001, the CCL is one of the ways in which the UK government regulates the carbon footprint of businesses in commercial, industrial, agricultural and public service sectors.
Certain commodities like electricity, natural gas, coal, lignite, hydrocarbon gas and coke, used for supplying lighting, heating and power, are taxed at a higher rate and the money is collected by the supplier on behalf of the government.
Domestic users, certain charities, road fuels, and businesses with low energy consumption are exempt from paying the Climate Change Levy.
The CCL charge, which is measured in pence per kilowatt-hours (kWh) changes every year, based on a variety of factors. As of 1st April 2020, the levy stands at 0.811p per kWh for electricity, and 0.406p per kWh for gas.
On April 1st 2025, the rate will reduce to 0.775p per kWh for electricity, but gas will increase to 0.465p per kWh.
The best way to reduce how much your business is charged for the CCL is to use less energy. Spending money on making your premises more energy efficient, whether that’s through renewable resources, better insulation, or reduced working hours, will have a significant effect on the amount you’re charged in the long run. It will also have wider effects in terms of brand identity and help contribute towards a healthier, greener environment too.
Here are some tips on how to make your business premises more energy efficient:
Have a look at your temperature control systems and ensure that you’re not spending energy on heating up or cooling down areas that aren’t in use. Maybe you could rearrange the office in order to make best use of the current system or even consider upgrading it.
Don’t let your hot water run hotter than 60 degrees. That’s more than enough for kitchen and bathroom usage.
Upgrading the insulation in your walls, windows and doors is an obvious but effective way of keeping business energy costs down.
You don’t need to leave computers on standby overnight, nor should desk lamps be left on whilst no one is in the building. Fitting your office with automatic light sensors and encouraging staff to switch off when they leave can save up to 30% in energy costs.
Energy efficient lights might take a little while to turn on, but in the long run they can help reduce your lighting energy costs by around 75%.
Fitting a smart meter in your business to monitor your energy consumption is a great way to help reduce your outgoings. Once you know where the problem areas are, you can begin to make targeted approaches to lowering your carbon footprint.
Even a change of 1 degree can significantly reduce the costs. Making sure your office is kept at a level of between 16 – 19 degrees is perfectly justifiable.
You can get in touch with your supplier to arrange an energy audit. That way you know you’re receiving professional advice on how your business can lower consumption and therefore save money.
Another very effective way to save money on your long-term energy expenditure is to sign a Climate Change Agreement, or CCA. These are voluntary agreements made between UK industry and the Environment Agency with the aim of reducing carbon dioxide emissions. Businesses that have signed a CCA can save up to 93% on CCL charges on electricity, or 65% on other fuels.
CCA’s are designed for what the Environment Agency terms “energy intensive” businesses, which can be anything from plastic moulding and metal packaging, to pig and poultry farming. Companies are then given 3 biennial milestone targets to monitor their progress.