The Climate Change Levy (CCL)

The Climate Change Levy (CCL) is an environmental tax on business energy, charged by suppliers on every unit of electricity, gas and solid fuel a non-domestic customer uses, and passed to HMRC. It appears as its own line on the bill, which makes it one of the few parts of energy policy every business can see directly. It also makes the case for efficiency slightly stronger than the commodity price alone suggests: every kWh saved avoids the levy as well as the energy cost.

Rates and scheme details in this lesson were checked in July 2026. Rates change most Aprils, so confirm current figures against the official CCL rates page on GOV.UK.

How the levy works

CCL main rates are charged per unit of energy supplied. From 1 April 2026 the main rates are 0.801 pence per kWh for electricity and the same for gas, with solid fuels at 6.264 pence per kilogram and LPG frozen at 2.175 pence per kilogram. Electricity and gas rates were equalised deliberately over recent years, removing what had been a tax penalty on electrification.

Not everyone pays. Domestic use is out of scope, as is charity non-business use, and very small business supplies below the domestic-scale de minimis thresholds. Energy-intensive users have their own reliefs through Climate Change Agreements, covered below, and certain uses (some forms of generation, mineralogical and metallurgical processes) are excluded.

Worked example — what CCL adds to a site's bill

Given

A manufacturing site uses 1,000,000 kWh of electricity and 2,000,000 kWh of gas a year
CCL main rates from April 2026: 0.801 p/kWh for both fuels

Find

The annual CCL cost.

Climate Change Agreements: the discount for committing to targets

Energy-intensive sectors can hold a Climate Change Agreement (CCA): a negotiated deal, administered through sector associations and the Environment Agency, that grants a large CCL discount in exchange for meeting energy efficiency targets. With a CCA in place, the discount is currently 92% on electricity and 89% on gas.

For the site above, a CCA would cut the electricity levy from £8,010 to about £641 and the gas levy from £16,020 to about £1,762: a saving of roughly £21,600 a year, for delivering efficiency improvements the business should arguably pursue anyway.

The scheme was renewed recently: a new six-year CCA scheme was confirmed in 2024, with its first target period starting 1 January 2026, targets running to the end of 2030, and reduced rates available to March 2033 for those that comply. Applications for the new scheme ran through 2025, existing participants were not rolled over automatically, and reporting is now at individual facility level. If a site is in an eligible sector (food and drink, chemicals, plastics, paper, and many others) and does not hold a CCA, checking eligibility is one of the quickest financial wins in UK energy management.

CCL turns efficiency targets into a tax position

A CCA makes energy performance a finance matter in the most direct way possible: miss the targets and the site's energy tax rises by an order of magnitude. Sites with CCAs therefore tend to have exactly the monitoring, baselines and target-tracking this platform's M&T course teaches, because the discount depends on proving performance.

The next lesson looks at the other side of the bill: the reliefs and compensation schemes that reduce electricity costs for eligible businesses.

Sources and further reading

Climate Change Levy rates, GOV.UK: current and announced rates.
Climate Change Agreements guidance, GOV.UK: eligibility, targets and the current scheme.
HMRC guidance on CCL reliefs and exemptions for the full list of excluded and relieved supplies.