Combined Heat and Power: Climate Change Levy
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential merits of changing the climate change levy exemption for natural gas combined heat and power.
Answered by James Murray
The Climate Change Levy (CCL) is a tax on the supply of energy to businesses and the public sector, introduced in 2001 to encourage energy efficiency.
There are a number of CCL exemptions and reliefs, including for energy used by members of the Combined Heat & Power Quality Assurance (CHPQA) programme. Good CHP systems are the most energy efficient means of generating heat and power for many businesses and have more environmental benefits when compared to gas only generation. CHPQA was introduced to promote and reward best practice in CHP generation and members of the programme receive financial benefits, including tax relief on their CCL obligations.
As a tax, CCL policy is for the Chancellor and any representations will be considered as part of the tax policy making process. The Department for Energy Security and Net Zero are responsible for the CHPQA programme and will continue to review the objectives of programme in line with the missions and goals of the government.
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