Climate Change Levy (CCL) costs explained

The information in this video and article was accurate as of 1 April 2025. We update our TPCs Explained hub every Spring to reflect any changes.

What’s the Climate Change Levy (CCL)?

The CCL is an environmental tax imposed on businesses as part of the government’s efforts to combat climate change.

The relative costs of gas and electricity have changed as electricity has decarbonised. Initially, the electricity rate was two-and-a-half times that of gas. Now, the two have reached equilibrium in terms of £/MWh.

Not all businesses have to pay CCL. Supplies used in certain forms of transport, charities, and businesses that consume less than 1MWh per month are all excluded from paying the costs.

How does the CCL work?

CCL is added to the gas, electricity or certain other fuels bill – per unit of energy consumed. The amount paid depends on the type and quantity of energy consumed, with rates updated annually by HM Revenue and Customs (HMRC).

How much of your energy bill does the CCL account for?

At 4%, the CCL amounts to a relatively small proportion of a standard bill. However, it can be even lower for those businesses signed up to a Climate Change Agreement (CCA).

A CCA requires a business to sign up to energy efficiency improvements in exchange for 92% off the CCL main rate.

How are CCL costs recovered?

The CCL is recovered on a £/MWh basis. Energy suppliers add it to their customers’ energy bills and passes on the CCL amounts they’ve collected to HMRC.

Will you know about CCL costs in advance?

Yes. The charging period starts on 1 April each year, while the CCL rate is published in either the Spring or Autumn Budget of the previous year.

What drives the CCL charge?

The two key drivers of this charge are:

• The relative carbon intensity of different taxable commodities
• State finances

To learn more about the other TPCs in your energy bill, head to our TPCs explained hub using the button below. Or, to understand more about electricity prices, download our latest bi-annual Electricity Prices Explained guide.

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