What CCL is and who pays it
The Climate Change Levy is an environmental tax on the supply of electricity, gas, liquid petroleum gas and coal to non-domestic consumers in the United Kingdom. It was introduced by the Finance Act 2000, took effect on 1 April 2001 and is administered by HM Revenue and Customs. The supplier collects the levy by adding it to the unit rate on the bill and then remits it to HMRC. The customer pays it; the supplier just acts as the collection mechanism.
The levy applies to almost all business and public-sector consumption. It does not apply to domestic consumption (which is charged at the reduced 5% VAT rate instead), to charities engaged in non-commercial activity, or to very small users below the de minimis thresholds (1,000 kWh of electricity or 4,397 kWh of gas per month at a single site). Renewable electricity is no longer exempt; the renewable electricity exemption was removed in August 2015.
CCL main rates from 1 April 2026
The main CCL rates are uprated annually each 1 April, with rates announced at the previous Autumn Statement. The rates in force from 1 April 2026 to 31 March 2027 are:
| Commodity | Main rate from 1 April 2026 | Main rate from 1 April 2025 (for comparison) |
|---|---|---|
| Electricity | 0.801 p / kWh | 0.775 p / kWh |
| Natural gas | 0.812 p / kWh | 0.775 p / kWh |
| LPG | 2.610 p / kg | 2.526 p / kg |
| Solid fuel (coal, coke etc.) | 6.350 p / kg | 6.157 p / kg |
The headline change for 2026/27 is the gas rate moving fractionally above the electricity rate. This continues a multi-year policy of equalising the two on an energy-content basis to remove the historical bias that taxed electricity (the cleaner of the two at the margin) more heavily.
The Climate Change Agreement reduced-rate scheme
The CCL has always been politically uncomfortable for energy-intensive industry, where it can represent a meaningful fraction of total energy cost. To prevent the tax from undermining UK industrial competitiveness, the Climate Change Agreement scheme provides a substantial discount in return for binding energy-efficiency or carbon-reduction targets. The discount levels in force from 1 April 2026 are:
- Electricity: 92% reduction (i.e. CCA participants pay 8% of the main rate, or 0.064 p / kWh from April 2026).
- Natural gas: 89% reduction (CCA participants pay 11% of the main rate, or 0.089 p / kWh from April 2026).
- LPG: 77% reduction.
- Solid fuel: 77% reduction.
The discount is significant in cash terms. On a 5,000,000 kWh per year electricity site, the difference between the main rate and the CCA rate is approximately £36,800 per year for 2026/27 alone.
Sector eligibility
CCAs are open to facilities in defined energy-intensive sectors. The list is long and is administered through sector associations, each of which negotiates an umbrella agreement with the Environment Agency on behalf of its members. Typical eligible sectors include:
- Cement, lime, ceramics, glass, bricks and other mineral products.
- Iron and steel, foundries, aluminium and other non-ferrous metals.
- Chemicals, including the chemical industries umbrella covering pharmaceuticals manufacturing.
- Pulp and paper, including corrugated case material.
- Food and drink — dairy, brewing, malting, meat processing, baking, soft drinks, sugar, edible oils, and starch.
- Plastics and rubber processing, textiles, leather, compressed gases.
- Mineral wool, gypsum, slag, supermarkets (cold storage), data centres (added in the 2021 extension).
The eligibility test for an individual facility within an eligible sector is generally a "70/30" rule — at least 70% of the facility's energy must be used in the eligible process — though sectors negotiate slightly different versions of this within their umbrella agreements.
The PP11 form and the 17 April annual deadline
Eligibility for the CCA reduced rate is established between the participant, the sector association and the Environment Agency. But the supplier — the entity that actually applies the discount on the bill — needs HMRC's authorisation to do so. That authorisation is the PP11 supplier certificate.
The PP11 is lodged by the customer with HMRC and a copy provided to the supplier, who applies the reduced rate to the relevant consumption. Critical points:
- The PP11 must be renewed annually. The renewal deadline is 17 April each year.
- If the renewal is missed, the supplier is required to charge the full main rate from the start of the new period until a valid PP11 is presented. Reclaiming the over-charge afterwards is administratively painful — far easier to renew on time.
- The PP11 specifies the percentage of consumption at the metered supply that qualifies for the reduced rate. If the same meter feeds eligible and non-eligible processes, the certificate carries the apportionment.
- Site changes — new meters, relocations, scope changes — require a fresh PP11 mid-year. A PP11 is not transferable between sites.
The new CCA phase 2026–2030
The Climate Change Agreement scheme has run in successive phases since 2001. The previous phase covered the period to 31 March 2025, with a transitional extension to bridge into the next round. The new phase opened on 1 January 2026 and runs to 31 March 2030, with the underlying target unit certificates valid through to March 2033 for late surrender purposes.
The 2026–2030 phase introduces tightened targets — most sectors face energy-efficiency improvement requirements 4–7 percentage points more demanding than the previous phase — and brings data centres formally inside the framework. The buy-out price for missing targets is increased from the previous phase, reflecting the gradual hardening of the carbon-pricing environment.
For an existing CCA participant the practical implication is a two-step renewal in 2026: a new underlying CCA agreement with the sector association, and a fresh PP11 supplier certificate covering the new agreement and lodged with HMRC by 17 April.
How CCL appears on your bill and where errors creep in
On a typical UK business electricity or gas bill, CCL appears as a separate line item. It should show:
- The kWh chargeable at the main rate (multiplied by the published rate).
- The kWh chargeable at the reduced (CCA) rate, where applicable, with a note of the certificate reference.
- Any kWh excluded — for example, mineralogical or metallurgical processes that hold a complete exemption.
Errors we see most often when auditing CCL line items:
- CCL applied to consumption that should be charged at the domestic / charity reduced rate. Mixed-use buildings (offices above a shop, residential schools, charity-run leisure centres) are the main offenders. The tax should follow the use, not the meter.
- PP11 certificate expired without renewal. The supplier reverts to main rate from the renewal date. We've seen sites pay the full rate for six months before the procurement team realised the certificate had lapsed.
- Apportionment on a single meter understated. A facility that has expanded its eligible process since the last PP11 was filed may be paying the reduced rate on too small a share of consumption.
- CCL applied to standing charges or capacity charges. CCL is a tax on energy supplied (kWh / kg). It does not apply to fixed charges. Some legacy billing systems still get this wrong.
- VAT charged on top of CCL at the wrong rate. CCL is itself within the VAT base — VAT is charged on the energy plus the levy. Where the underlying supply qualifies for the reduced 5% VAT rate (e.g. de minimis or charity), the CCL exemption usually follows.
If you want a no-obligation check on whether your bills are applying CCL correctly, our CCL checker provides a simple eligibility walkthrough and lets you upload a redacted bill for a manual review where the answer isn't clear-cut.