An end in sight for the Climate Change Levy?

The controversial Climate Change Levy (CCL) could be replaced by a carbon tax, or tradable carbon emission permits, if the Government accepts a recommendation from the Cabinet Office.

In its Energy Review published in February, the Cabinet Office`s Performance and Innovation Unit (PIU) suggested that DEFRA (the Department of Environment, Food and Rural Areas) and the Treasury should look at replacing the CCL from 2004. A consultation document on the recommendation is due out soon, and this will be followed in the Autumn by a White Paper.

The PIU suggests replacing the CCL with an expanded or modified version of the Emissions Trading Scheme launched earlier this year. This could allow UK companies to "trade" their carbon emissions internationally. The CCL came into effect from April 1, 2001, was designed to encourage the efficient use of energy in industry and commerce.