The Climate Change Levy
The UK Government has chosen the fiscal route to encourage UK industry to use less energy. The Government’s stated aim is to reform the tax system, according to the statement made in 1997, following the Kyoto Agreement.
“The burden of taxation will move from the ‘goods’ to the ‘bads’; encourage innovation in meeting higher environmental standards.”
As part of this commitment and following the recommendations in the Marshall Report on Economic Instruments, the UK Government is introducing the Climate Change Levy on all non-domestic use in April 2001.
The Climate Change Levy (CCL) will be charged on all energy supplied to the industrial and commercial users, as well as for agriculture, public administration and other services. This means that the energy supplier registers with, and pays levy to Customs and Excise, not individual companies. Individual businesses will pay the levy through their utilities bills.
Why is it needed?
If we neglect the need to improve our energy consumption, it is predicted that the earth’s climate will rise by 3 degrees over the next 100 years resulting in:
- Sea levels rising
- Global food supplies reduced
- 3 billion people could suffer increased water stress
- 290 million people could be exposed to the risk of malaria
- Tropical rain forests could disappear due to water shortages
How does it work?
The Key Features of the Scheme:
- All businesses will be able to claim enhanced capital allowances, regardless of size, industrial or commercial sector or location
- Enhanced capital allowances will permit the full cost of the investment in specified technologies to be relieved for tax purposes against taxable income of the period of the investment
- The qualifying technologies will have to meet defined energy efficiency criteria.
- They will be published on the Technology List on the government ECA website www.eca.gov.uk , and the criteria will be reviewed on an annual basis, along with new additional technologies
- Only investments in new and unused machinery and plant can qualify
- Qualifying products
Only a limited range of products and systems will qualify for the ECA these being:
- Variable Speed Drives (VSD's)
- Combined Heat and Power (CHP) systems
- Lighting control
- Motors
- Boilers
- Refrigeration
- Pipe insulation
- Thermal screens
Commitment needed
The aims agreed at the Kyoto summit conference held in Japan in 1997 was to curtail the emissions of "greenhouse gases" thought to be responsible for global warming.
To encourage industry to 'do its bit' in lowering emission levels, the government ECA scheme is being brought in, reducing the levels of tax payable on capital investment made in energy efficient technologies.
Control Panel Consulting and Schneider Electric can work with you to achieve these savings.
Further information
Five areas of support are provided:
- Free energy surveys provided by the Asset Cost Management Group
- Free software tools from Schneider and ETSU for downloading
- Free guidance documents from Schneider and others for downloading
- Links to government and other web sites from which more information can be obtained
- Contact names in the DTI, DETR and MAFF
