Back in March 2016, it was announced that the government’s Carbon Reduction Scheme (CRC), which applied to large energy users, would be scrapped at the end of the 2018/19 compliance year. This means that the Climate Change Levy (CCL) will be the UK’s only carbon tax on energy bills. As a result, CCL will be increasing from April 2019 to recover the revenue which is forecast to be lost through abolishing the CRC.
From April 2019 the CCL charges levied on all business energy consumption will increase significantly. These are the current rates, the new rates from April next year, and the percentage increases from 2018 to 2019.
|
Pre-April 2019 |
Post-April 2019 |
Increase |
|
|
Electricity |
0.583 p/kWh |
0.847 p/kWh |
45% |
|
Gas |
0.203 p/kWh |
0.339 p/kWh |
67% |
Some companies that currently pay CRC, especially those who are very large energy users, may actually see lower energy bills after April 2019—despite the rise in CCL rates. Organisations with Climate Change Agreements (CCA’s) in place will also be insulated from some of the increase. However, for the vast majority of UK businesses, the outlook is that energy costs per kWh will increase.
Rates beyond 2019 are yet to be published but, given the historical changes and the current policy environment, we believe further increases in the CCL rates are to be expected—to encourage further reductions in energy use and increase the uptake of renewable energy generation.
Now is the time to consider the impact these new changes in CCL will have on your future energy costs and budgets post-April 2019.
Depending on the impact, our team of in-house efficiency experts can support you to mitigate any future increases by identifying opportunities to reduce consumption. By working with you to understand where, why and how you’re using energy across your activities and site portfolio, we can help you to reduce overall energy demand—improving your bottom line and sustainability.