Climate Change Levy - A first primer
Climate Change Levy - A first primer |
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This article is based on information that first appeared in "Energy and Environmental Management" - November/December 2000 Issue. The magazine is published by DETR and copies can be obtained by contacting Joanne Foy on 01625 613 000.
What is it and how much is it?A new website www.detr.gov.uk gives the lowdown on the Climate Change Levy, the new tax that will be introduced from April 2001, for all of the UK's non-domestic sector. The tax will be recycled back through 0.3 percentage point reduction in National Insurance contributions and through a £50 million energy efficiency fund. The fund will set up schemes to promote energy efficiency in businesses.
The rates that will apply are:
0.15p/kWh for gas
The site is divided into three sections. The first section describes the background to the Climate Change Levy. It gives information on exemptions and discounts to the levy. Exemptions will be given for: good quality CHP; electricity generated from new renewable energy; fuel used jointly as a feedstock and an energy source; and energy used in the electrolysis process. Energy intensive sectors are eligible for discounts, which are being negotiated by trade associations, in exchange for setting energy targets. These negotiations will result in energy efficiency agreements between the Government and energy intensive facilities.
To reduce the effects of tax, companies are being encouraged to become more energy efficient, and this section of the site makes reference to the assistance that is and will be available. Help is currently available through the Energy Efficiency Best Practice Programme. In the future assistance will be from the £50 million energy efficiency fund and through the enhanced capital allowance (ECA) scheme.
The second section of the site outlines the conditions to be met in order to take part in the energy efficiency agreements. The third section gives detailed information about the negotiated agreement process. Here, it is explained how to determine if a site is eligible for a discount, and the options available. To be eligible for a discount, companies must be regulated by parts A1 and A2 of the PPC regulations. To enter an agreement, companies must contact their trade association. (A list of all trade associations currently in negotiation is included in the first section of the site.)
A participant's pack is available from trade associations taking part in the energy efficiency agreements. For contact details of the trade associations please contact the Environment and Energy Helpline on 0800 585794.
The site can be accessed through www.detr.gov.uk then click on Environmental Protection, Climate Change and Climate Change Levy and Energy Efficiency.
Further information on the Climate Change Levy
(CCL)
Enhanced Capital Allowances - What's on the list?
The Enhanced Capital Allowance Scheme is one of a series of measures that are being developed or introduced to ensure that the UK meets its target for reducing greenhouse gases under the Kyoto Protocol, and so assist the European Union to reach its target. The measures will also help the UK move towards its domestic target of a 20% reduction in C02 emissions.
The scheme is due to be launched on 16 November (subject to EU State Aid Clearance). An Energy Technology List of eligible products or product types will be available on the web site www.eca.gov.uk.
This list consists of individual products that meet the criteria for boilers (including add-ons), motors, variable speed drives, refrigeration and thermal screens. Within these categories only products on the list will be eligible for an ECA, which will provide an effective discount on firms' investment in these technologies.
Even if they are not on the list now, manufacturers of products within these technologies can continue to apply to put them on the list. The criteria can be found on the web site. The list will be updated on a quarterly basis. For lighting and pipework insulation any product which meets the criteria will be eligible. Manufacturers are asked to provide evidence to taxpayers (in the form of a certificate or details on the invoice) that the product meets the relevant criteria. CHP eligibility will be based on the Government's CHPQA scheme.
Investments in eligible technologies can be backdated.
Once an ECA is claimed it is statutory requirement that records are kept in accordance with Section 12(B) of the Taxes Management Act 1970. In practice this means that records must be kept for at least six years. The ECA web site will keep archives of eligible criteria and products for this time.
It is anticipated that the legislation to provide for the scheme will be introduced in the Finance Bill 2001. As such, the proposals could be subject to change, and are conditional on the Finance Bill receiving Royal Assent. The details on this web site are also subject to the Enhanced Capital Allowance scheme obtaining EU State Aids clearance, and so claims cannot be made until after Royal Assent. However, as Government is aware that this could create an investment desert, it is proposed investments in eligible technologies can be backdated to the publication of the list (details will be available on the web site). Claims will be included as part of their normal tax returns. The Inland Revenue will provide more guidance on claiming ECAs around April 2001.
It is anticipated that the ECA scheme will grow organically. Subject to cost-effectiveness criteria, control on costs and satisfactory methods of certification being developed further carbon saving technologies will be added in future years. If the Government feels that a technology would be a useful addition to the ECA scheme it will work with Trade Associations and other relevant parties to develop it for possible inclusion.
For further information visit the web site at www.eca.gov.uk or ring the Environment and Energy Helpline on 0800 585794.
Last edited: 24/03/04
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