The Climate Change Levy is a tax on the business use of energy. It has been introduced by the UK Government as one of a range of policies to reduce emissions of greenhouse gases. These gases - of which carbon dioxide (CO₂) is by far the most significant - are believed to be having a damaging effect on our climate. Emissions of greenhouse gases will be limited for all developed countries under an international agreement – The Kyoto Protocol.

The Climate Change Levy will be charged on energy delivered to industrial and commercial energy users from April 1st 2001. It will be charged on electricity, gas, coal and LPG and will be collected by your energy suppliers. The impact of the Climate Change Levy on your energy costs depends on your current fuel mix and energy tariff. A good rule of thumb is that the Levy will add about 20% to your gas costs and 10% to electricity costs. The Levy is being imposed to encourage businesses to improve energy efficiency. Oil is not subject to the Climate Change Levy. Information Sheet 1 gives further details about the Climate Change Levy including the proposed levels of taxation.