Climate Change Levy: What does it mean for your business?

Every business in Britain needs to be watching Climate Change Levy (CCL) trends very closely. Why? Since 2001, the CCL has inched up by 3% per year. In 2019, it is poised to start affecting your bottom line in an even more dramatic way. Now, more than ever, you need a trusted energy partner, and to be armed with the knowledge of what’s to come.

Changes to the Climate Change Levy in 2019

Rates are set to uplift by much more than ever before. Although this could be seen as a burden to businesses in the U.K., we are actually just about in the middle when compared to carbon taxes around the world. In fact, Sweden, Norway, Finland, Switzerland, France, and Denmark all have a higher carbon tax per tonne of CO2 emissions. What does the rate increase mean for your business in 2019?

Rate Increases

Over the past 17 years, rates have gradually increased each year. They are now due to spike with a 45% CCL increase on electricity and 67% increase on gas and other fuel.

Does everyone have to pay the CCL?

While virtually every business in the U.K. has to pay the CCL, there are a few exceptions. You’re exempt if:

  • Your business is very small
  • It is a charitable business engaged in non-commercial activities
  • Your business generates electricity from a renewable source and uses it exclusively on-site
  • The business invests in Combined Heat and Power (CHP)

Strategies to Reduce Energy Taxes

How should your business respond to rising, non-commodities costs? First and foremost, you can use less energy and reduce your company’s carbon footprint. You can also pay a reduced main rate if you have a Climate Change Agreement in place with the Environmental Agency. After April 1, 2019, this will result in a 93% reduction on your CCL for electricity and a 78% reduction for gas and other fuels.

Non-intensive, large energy users such as hospitals, supermarkets, and office blocks may see and overall reduction if savings from the abolition of CRC offsets the rise in CCL rates. Finally, a business that invests in small scale energy generation can reduce their energy taxes. This is because their input fuel will attract the lower CCL rate, rather than the more expensive Carbon Price Support rate.

Investing in a CHP 

In today’s world, it is easy to take energy for granted. However, it is important not to for several reasons. Taking energy for granted can result in a large energy bill, missing out on cost-effective self-generation, and relying on inefficient energy from the grid. One solution is investing in a CHP, or combined heating and power plant.

A combined heating and power plant is an amazingly efficient engine. They produce electricity that your business can use and also sell back to the grid. They also capture heat energy which means that a CHP can both heat a building and chill refrigerators. With a government Renewable Heat Incentive (RHI) subsidy, CHP’s are becoming a very attractive proposition for businesses and their partners.

Why British Gas?

For over 200 years, British Gas has been a leader in energy innovation. British Gas serves over 400,000 business customers, which gives us in-depth experience to guide your business through the complexities of 21st century energy management. We prefer open conversations with our customers about strategic approaches to energy procurement, how your business uses energy, and what trends you need to consider. Our goal is to help you find smarter ways to control costs.

British Gas is your trusted energy partner. Talk to us today to learn more about how changes in the Climate Change Levy will affect your business.


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