Climate Change Levy 'has had relatively little effect on business emissions'

The Committee's findings include:

• The Levy will reduce annual UK carbon dioxide (CO2) emissions by 12.8 million tonnes by 2010 - but these savings have come mainly from the effect its announcement had on raising awareness of the potential for energy savings and most of these savings were the result of actions taken before the tax actually came into operation.
• The Levy itself has had relatively little effect on business emissions, especially in the case of small and medium-sized enterprises (SMEs) and large but non-energy intensive organisations.
• Complying with CCAs has galvanised business interest in finding energy savings and the incentive of the tax discount that they offer has been key to this.
• The exemptions on the CCL for 'green electricity' and combined heat and power (CHP) have had minimal effect on the construction of new renewables and CHP capacity, essentially because they are worth too little money.
• The CCL package does not impose a damaging economic burden on UK business overall and is encouraging greater resource productivity and stimulating energy efficient industries.

The Report concludes that the CCL has not worked quite as expected. Instead of rationally seeking to reduce their costs through increased energy efficiency, businesses appear to have needed an extra stimulus to change their approach to energy use. This has profound implications for climate change policy more widely; if even large companies require additional policies to drive behavioural change, this must be all the more true for small businesses, public bodies, and private households.

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