Buried in every depot electricity bill and workshop gas bill is a tax that most transport businesses pay without ever seeing the name: Climate Change Levy. It is charged by the energy supplier, passed through on the bill, and for an energy-hungry site - vehicle wash, workshop heating, roller doors cycling all winter - it is a real line item. Understanding what drives it, and which supplies escape it, is one of the few easy wins left on the utilities side.
Climate Change Levy (CCL) is paid at main rates on electricity, gas and solid fuels such as coal, lignite, coke and petroleum coke supplied to businesses in the industrial, commercial, agricultural and public services sectors. The main rates are listed on the business energy bill, and the supplier is responsible for charging the correct levy.
The rates are set per kilowatt-hour for gas and electricity, and per kilogram for everything else. From 1 April 2026 the main rates are £0.00801 per kWh for electricity and the same £0.00801 per kWh for gas - the two converged in April 2024 and have moved together since. LPG is £0.02175 per kilogram, and any other taxable commodity is £0.06264 per kilogram. From 1 April 2027 electricity and gas rise again to £0.00827 per kWh, with other commodities at £0.06468 per kilogram and LPG unchanged.
Individually the numbers look trivial. Across a depot burning 500,000 kWh of electricity a year, the 2026-27 electricity levy alone is about £4,000 - and it arrives whether or not anyone optimises a single route.
The exemptions matter more than the rates. The main rates do not apply to supplies to domestic consumers, to charities for non-business use, or to businesses using small amounts of energy. More interesting for operators: electricity, gas and solid fuel are normally exempt where they are used in certain forms of transport, where they will not be used as fuel, where they feed a generating station of 2MW or more, or where they qualify through the combined heat and power quality assurance programme. Electricity generated from renewable sources before 1 August 2015 also keeps its exemption.
The transport carve-out is the one hauliers brush against most often - fuel used as fuel in a vehicle is not the levy’s target; the depot supply is. Businesses running their own small generating plant or CHP should check which side of the CHPQA line their kit sits on.
CCL has a second limb most transport businesses will never touch: Carbon Price Support rates, paid by owners of electricity generating stations and operators of combined heat and power stations. Liability arises when gas passes the meter at the generating station, or when LPG, coal and other solid fossil fuels come through the entrance gate. The rates - for example £0.00331 per kWh on gas and £1.54790 per gigajoule on coal - have been frozen at their current levels from 1 April 2016 through to 31 March 2028. Small generators, stand-by generators and Northern Ireland stations are outside the charge.
The serious money sits in the relief for energy-intensive businesses. A business in an eligible sector that signs a climate change agreement with the Environment Agency - committing to energy efficiency targets in exchange for a levy discount - pays dramatically reduced main rates. From 1 April 2026 the discounts are 92% off the electricity rate, 89% off the gas rate, 77% off LPG and 89% off other taxable commodities. A cold store or energy-hungry logistics site with a CCA keeps almost the entire levy; one without pays it in full. Eligibility runs through sector trade associations, which administer the umbrella agreements.
Three practical checks for any transport business: confirm the levy rates on the current bill match the published table - suppliers apply the rate in force at the billing date; review whether any supply qualifies for an exemption, particularly anything not used as fuel or used in transport; and if the site is genuinely energy intensive, ask the trade association whether a climate change agreement is open. The difference between the full rate and 8% of the full rate is the difference between a complaint and a saving.
One mechanics point that matters at renewal time: the supplier charges the rate in force when the supply is made, so the April rate changes flow straight through to bills without any action by the customer - and any annual energy contract straddling 1 April should be checked to confirm the new rate has been applied from the right date rather than averaged or overlooked.