Commentary

V21.141 Climate change agreements

Part V21 Climate change levy

V21.141 Climate change agreements

V21.141 Climate change agreements

Introduction

A 10% (20% for supplies before 1 April 2011 and 35% between 1 April and 31 March 2013) reduced rate of CCL applies to supplies of electricity for energy-intensive industries that have entered into a negotiated energy efficiency CCA. Facilities covered by a CCA are required to deliver energy efficiency or carbon saving reduction targets in return for a levy discount.

As part of the Government's reform of energy taxes in Budget 2016 it was announced that the discounted rate of CCL with effect from 1 April 2019 would change to reflect changes in the Carbon Reduction Commitment Scheme which will come to end at the end of the current phase. Holders of CCAs will pay the following reduced rates of CCL.

Taxable CommodityRate from 1 April 2018Rate from 1 April 2019Rate from 1 April 2020Rate from 1 April 2021
Electricity10%7%8%8%
Gas35%22%19%17%
Petroleum gas or other gaseous hydrocarbon in a liquid state35%22%23%23%
Coal and lignite; coke and semi coke of coal or lignite; petroleum coke35%22%19%17%

The overall responsibility for the agreements lies with the Secretary of State. HMRC's role is to oversee the application of the reduced rate and not other aspects of the agreements.

There are, broadly, two categories of CCA. Firstly an agreement entered into directly with the Secretary of State1. Secondly, a combination of umbrella and underlying agreements2.

CCAs—direct agreement with Secretary of State

A CCA (including one entered into before 28 July 20003 is by direct agreement if

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