The Climate Change Levy & Business Energy
Climate change is one of the looming problems in the 21st century as it can wreak havoc on our planet. Because of this, governments are taking action to ensure that businesses produce less waste and use less energy. After all, industrial production is the most significant contributor to climate change as it utilizes energy, increases waste, and creates many other problems.
So, if you have heard about the Climate Change Levy (CCL) but don’t know what it is or how it will impact your business, you are in the right place. Here is a complete guide for your business. You can also read more here.
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Climate Change Levy: The Basics
CCL is an environmental tax on the energy businesses consume. The tax is there to encourage businesses to become more energy-efficient in their operations. Besides that, it will also help businesses decrease their emissions.
The CCL applies to businesses in many sectors such as agricultural, industrial, commercial, and public services. Remember that the CCL tax is charged on “taxable commodities” for power, lighting, and heating purposes. Businesses can pay the CCL at the carbon price support (CPS) or central rates.
Exemptions To The Climate Change Levy
All taxes have exemptions, and so does the CCL. Here are some of the business requirements you will have to meet to get exemption from the CCL:
You are a domestic energy user.
Your business uses a small amount of energy. For example, your energy use is less than 33 kWh of electricity per day or 145 kWh of gas per day.
You are a charity doing activities that are not commercial.
On the other hand, if you are not exempt from the CCL, you can still pay a low rate by creating energy-efficient changes in your business.
How To Pay A Reduced Rate On The Climate Change Levy
The best way to pay a lower rate on the CCL is to sign a CCA (Climate Change Agreement). The agreement can offer you a discount of more than 90% on your CCL electricity rate and more than a 65% discount on other fuels you are using. Of course, there is a catch to obtaining such an excellent discount.
To enjoy a lower rate, you will have to improve your business’s energy efficiency and reduce the average energy your business consumes. Besides that, the CCA also states that you will have to measure and report your carbon emissions and business energy use. You must do this over four target periods of two years.
After each period, your business must meet its targets. If it fails to do so, you will be out of the scheme and not eligible to receive the CCL discount.
Top Ways To Make Your Business More Energy-Efficient
If you want to pay a lower CCL rate and stay in the scheme, you can make a few changes to ensure efficient energy use. Here are some of the top steps you can take for energy efficiency:
1. Switch To Energy-Efficient Light Bulbs
LED lighting uses 75% less electricity than other lighting options. Besides that, they also produce less carbon dioxide. Lighting can contribute to a high energy bill, which is why you can opt for better solutions.
You can switch all bulbs in your business to LED. They are affordable and will help you keep energy consumption to a minimum in no time.
2. Carry Out Energy Audits
Energy audits will help you understand how much energy you are using and for what. You can look for room for improvement in your energy usage and make changes accordingly. It would help if you also track the progress of the changes you have created.
Doing this will help you understand what more you can do to ensure better energy usage. Consistency is the key to carrying out energy audits and tracking progress to make relevant changes.
3. Upgrade To Energy-Efficient Appliances
Many businesses don’t invest in newer models and appliances because they believe that the old ones are working fine. However, you might not realize that they can be the reason for your high energy consumption. The latest appliances and models are more energy-efficient because they have features that save energy.
So, it will cost you to switch to new appliances, but the investment will pay off as you will face fewer energy costs. Make the switch to the latest appliances and notice the significant difference in your energy bill. Be sure to check out the latest Energy Star appliances as they are more efficient.
Final Words
That was your complete guide to understanding the CCL. All businesses have to pay this levy, and you can pay lower rates by taking energy-efficient steps to save costs. Once you do, you will notice a significant change in your bills and energy consumption.
Be sure to go through the CCA in detail to understand your obligations under the agreement. It will help you take appropriate steps as you pay a discounted rate of the CCL and achieve your energy efficiency goals.
Other useful links about Business Energy
8 Ways You Can Reduce Your Carbon Footprint
Business Energy Efficiency
Business Energy For Businesses
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