Paying the Climate Change Levy? A Guide to Reducing Your CCL Costs

If your business pays the Climate Change Levy (CCL), you’re probably aware of how much it can impact your running costs, especially if you use a lot of energy. What’s less clear is the range of schemes that could reduce or reclaim some of that cost. With so many acronyms like CCA, EII and Levy Exempt Power, it can feel hard to know where to start.

This guide explains three of the main government schemes and options that could help lower your CCL costs. We’ll break down how each one works, who it’s for, what the pros and cons are, and how they can be used together.

Climate Change Agreement

What is it?

A Climate Change Agreement is a voluntary deal between UK businesses and the Environment Agency. In return for improving energy efficiency or reducing carbon emissions, you get a discount on your CCL which is currently up to 92% off electricity and 83% off gas.

Who is it for?

A CCA is available to businesses in over 50 eligible sectors, including plastics, food and drink, ceramics and chemicals. Most companies apply through a sector association.

Benefits:

• Large CCL discounts
• Encourages long-term energy improvements
• Supports your wider net zero plans

What to watch out for:

• You must meet performance targets or risk losing the discount
• Regular reporting is required

The scheme is set to end in 2027 and its future is not guaranteed.

Can it be combined with other schemes?

Yes, but not for the same usage. If some of your electricity is already covered under the EII exemption, you can’t apply the CCA discount to that same portion.

Useful documentation:

As part of your CCA application, you will need to provide a completed:

• PP11 form

• PP10 form

EII Exemption Scheme (Energy-Intensive Industries)

What is it?

The EII exemption allows certain businesses to avoid CCL and other policy costs (like Renewables Obligation and CfD) on a portion of their electricity. It offers bigger savings than the CCA, but the eligibility requirements are stricter.

Who is it for?

Businesses in energy-intensive, internationally traded sectors such as steel, paper, glass, and industrial gases. To qualify, you must meet the official EII eligibility criteria.

Benefits:

• High savings on electricity bills

• Helps protect competitiveness for exporters

What to watch out for:

• The application process is complex and time-consuming

• Requires financial audits

• This applies to electricity only, not gas

Can it be combined with other schemes?

Yes, with limits. If part of your electricity qualifies for EII, you can’t apply CCA to that same amount. But you can still use a CCA for gas, or for any non-EII-covered electricity.

How to apply:

You need to apply directly to the Department for Business and Trade (DBT), completing and submitting;

• The application form
• Audited financial accounts
• A breakdown of electricity usage compared to Gross Value Added (GVA)

Once approved, you will receive an exemption certificate, which you’ll pass on to your electricity supplier. They’ll then apply the reduced charges to your bill.

Onsite Renewable Generation (CCL Exemption)

What is it?

If you generate electricity from renewable sources on-site (e.g. solar) and supply it to another business, you may qualify for a CCL exemption under Levy Exempt Power.

Who is it for?

Businesses with renewable generation that supply electricity to third parties, often tenants or partners on the same site.

Benefits:

• No CCL charged on eligible renewable supply

• Supports sustainability goals

• Improves return on investment in renewables

What to watch out for:

• Only applies if supplying another business, not your own usage

• Requires proper certification

• Admin can be demanding

Can it be combined with other schemes?

Not for the same usage. You can’t apply additional discounts to energy already exempt from CCL. But you can still use CCA or EII for any imported grid energy.

Can You Combine CCL Reduction Schemes?

Yes, in some cases. But you need to carefully separate which parts of your usage each scheme applies to.

CCA + EII – Compatible, but only for separate energy streams
If 70% of your electricity qualifies under EII, you can’t apply a CCA to that same portion. But, you can still use a CCA for gas or the remaining 30%.

CCA or EII + Onsite Generation – Compatible with limits
Electricity that’s CCL-exempt under Levy Exempt Power can’t be double-counted. But if you still import some energy from the grid, that portion may qualify for a CCA or EII.

Summary Table

Final Thoughts

The Climate Change Levy can be a significant line on your business energy bill, but it doesn’t have to be a fixed one. By understanding the schemes available, from Climate Change Agreements to EII exemptions and onsite generation, you can take control of your energy costs in a way that suits your operations and goals.

No single option fits every business. Some schemes offer bigger savings but require more admin. Others are easier to access but come with stricter eligibility rules. The key is knowing what applies to you and where the opportunities lie.

If you’re not sure where to begin, start by reviewing your current energy profile. Look at how much gas and electricity you use, which sectors you fall under, and whether any of your usage might already qualify for relief.

And remember, getting the basics right first (like accurate energy data and clear reporting) can make everything else easier. Alternatively, you can simply let us do the hard work for you. Get in touch with our team today for a free energy health check and we’ll advise you on what could be available.