Climate Change Levy/Carbon Price Floor Briefing

Budget 2017 Puzzle Piece

The Autumn Budget 2017 has announced that the government will set Climate Change Levy (CCL) main rates for the years 2020/2021 and 2021/2022 at the Budget in 2018, with the exception of the rate for Liquefied Petroleum Gas (LPG) which will be frozen at the 2019/2020 level.

This follows the announcement at the Budget 2016 that the main rates of CCL will increase from the 1 st April 2019 to recover the tax revenues lost by closing the Carbon Reduction Commitment (CRC) energy efficiency scheme and with changes to the reduced rates payable by businesses in the Climate Change Agreement (CCA) scheme.

It was also announced in the Budget 2016 that the balance between rates on taxable commodities would be updated to reflect the changes in the fuel mix used in electricity generation; starting with an adjustment of the current electricity/gas ratio of 2.9:1 to 2.5:1 in 2019/2020. The government also announced its intention to rebalance the electricity/gas ratio to 1:1 by 2025 to deliver greater carbon savings.

The main and reduced rates of CCL across the period will be as follows:

Main Rates

Taxable CommodityRate from 01/04/2017Rate from 01/04/2018Rate from 01/04/2019Rate from
01/04/2020
Electricity (£ per kWh) 0.00568 0.00583 0.00847 To be announced at Budget 2018
Natural gas (£ per KWh) 0.00198 0.00203 0.00339 To be announced at Budget 2018
LPG (£ per kg) 0.01272 0.01304 0.02175 0.02175
Other taxable commodity (£ per kg) 0.01551 0.01591 0.02653 To be announced at Budget 2018

Reduced Rates

Taxable CommodityRate from 01/04/2017Rate from 01/04/2018Rate from 01/04/2019
Electricity (£ per kWh) 10% 10% 7%
Natural gas (£ per KWh) 35% 35% 22%
LPG (£ per kg) 35% 35% 22%
Other taxable commodity (£ per kg) 35% 35% 22%

Exemptions for Mineralogical and Metallurgical Processes

The Autumn Budget 2017 has announced that the government will legislate in the Finance Bill 2018 to 2019 to make minor amendments to the way the exemptions from CCL for energy used in the mineralogical and metallurgical processes are defined.

The scope will remain unchanged but the changes will ensure the exemptions remain operable after the EU exit and address business concerns about how the exemptions apply in landlord-tenant situations. The changes will take effect from spring 2019.

Carbon Price Support (CPS) Rates 2020/2021

The Autumn Budget 2017 has announced that revised indicative Carbon Price Support (CPS) rates have been published for 2020/2021.

The CPS rates of Climate Change Levy and Fuel Duty from the 1st April 2016 to the 31st March 2021 are as follows:

Carbon Price SupportCapped Rate from
01/04/2016 to 31/03/2020
Indicative Rate from
01/04/2020 to 31/03/2021
Carbon Price Equivalent (tCO2) £18.00 £18.52
Supplies of Commodity used in Electricity Generation
Natural Gas (kWh) £0.00331 £0.00341
Liquefied Petroleum Gas (kg) £0.05280 £0.05432
Coal/Solid Fossil Fuels (GJ) £1.54790 £1.59259
Gas Oil/Bio-blend/Kerosene (litre) £0.04916 £0.05058
Fuel Oil/Heavy Oil/Light Oil (litre) £0.05711 £0.05876

Total Carbon Price

The Autumn Budget 2017 has announced that the government is confident that the total carbon price, currently created by the combination of the EU Emissions Trading Scheme (EUETS) and the Carbon Price Support, is set at the right level and will continue to target a similar total carbon price until unabated coal is no longer used. This will deliver a stable carbon price while limiting costs on business.

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