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CLAUSE 103: CLIMATE
CHANGE LEVY
SUMMARY
1.
Clause 103 provides for three amendments to the existing climate change
levy provisions. The clause exempts from climate change levy gas
supplied and consumed in Northern Ireland; allows for auto-generators
and exempt unlicensed electricity suppliers who produce electricity
to certify for excluded and exempt use; and extends the combined heat
and power exemption to stations operated by third parties. The changes
will come into effect on 1 April 2001.
DETAILS OF THE CLAUSE
2.
Subsection (1) amends Schedule 6 to the Finance Act 2000 (climate
change levy). The extent of these amendments is described in the
following paragraphs.
3.
Subsection (2) inserts new paragraph 11A (Exemption: Northern
Ireland gas supplies) after paragraph 11 (Exemption: supply not for
burning in the UK) of Schedule 6.
4.
New paragraph 11A exempts from climate change levy gas supplied and
consumed in Northern Ireland.
5.
Subsection (3) amends paragraph 14(2) by providing that a supply
used by an exempt unlicensed electricity supplier to produce electricity
is liable to CCL unless the electricity is for use in an exemption
retaining way.
6.
Subsection (4) amends paragraph 14(3)(c) by providing that
a supply used by an auto-generator to produce electricity is liable
to CCL unless the electricity is for use in an exemption retaining
way.
7.
Subsection (5) amends paragraph 14 by defining exemption retaining
ways as being excluded because for domestic use or use prior to 1
April 2001; exempted because the supply is not for burning in the
UK, for use in transport, for use not as a fuel, and for use in producing
taxable commodities, hydrocarbon oils and uranium.
8.
Subsection (6) substitutes in paragraph 15(1)(a) of Schedule
6 the existing phrase “the commodity is to be used by that person”
with “that person intends to cause the commodity to be used”. This
provides for the combined heat and power (CHP) exemption to be claimed
on behalf of stations operated by third parties.
9.
Subsection (7) provides for the changes to take effect on 1
April 2001.
BACKGROUND
10.
The temporary exemption for natural gas in Northern Ireland is to
help encourage the development of their fledgling gas market and to
help encourage fuel switching from more environmentally damaging fuels.
11.
This clause also extends the instances where autogenerators can claim
relief on their input fuel. Currently relief can only be claimed
on domestic use, exports, transport and non fuel use. If the electricity
generated is for use in producing hydrocarbon oils, other taxable
commodities and uranium, then relief can now be claimed on the input
fuel. The purpose of this is to avoid double charges to levy, and
to correct the anomaly where electricity bought directly from the
grid for use in hydrocarbon oil production is exempt from the levy,
yet where the electricity is self generated, levy was incurred on
the input fuel.
12.
Previously exempt unlicensed electricity suppliers who produce electricity
could not claim any relief on their input fuel. This clause brings
their treatment into line with the treatment of autogenerators. These
two categories are now treated in the same manner as both are taxed
on their input fuel rather than the electricity generated.
13.
Exemption for CHP stations should rest on the efficiency of the station.
Therefore stations should not be disadvantaged by the fact that they
are run by third parties. Clause 102(6) rectifies the position.
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