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OECD Papers

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The United Kingdom Climate Change Levy

A Study in Political Economy

This report focuses on one environmental instrument which is part of the UK’s wider programme of policies to deal with its various obligations to control climate change. The instrument is the Climate Change Levy (CCL) which takes the form of a tax on energy. However, the CCL cannot be viewed in isolation – it is part of a fairly elaborate package of measures, and its interaction with the other instruments in that package need to be understood. Accordingly, we first set out a brief history of the UK’s approach to climate change control, and describe the various components of the policy package. A detailed history of the CCL is then provided, and this is followed by an analysis of the features of the CCL, focusing particularly on the political factors that influenced its design, and the various reactions to it. Finally, we look at the likely future of the CCL in light of developments in climate change policy in the wider Europe.

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