2020 Budget Energy Highlights

The government’s budget includes a number of developments in the energy sector:

  • Climate Change Levy (CCL)– The government has announced they are raising the rate on gas to £0.00568/kWh in 2022-23 and to £0.00672/kWh in 2023-24. To ensure the tax system treats fuels that are used off the gas grid more equitably, the government will freeze LPG at 2019-20 levels until April 2024. Electricity rates for CCL will be frozen.


  • Climate Change Agreement (CCA)  – The CCA scheme will be reopened and extended. The CCA scheme allows businesses to reduce their CCL bill in exchange for meeting targets to improve their energy efficiency. The government will launch a consultation to decide the terms while also looking at the long term future of the scheme.


  • Renewable Heat Incentive (RHI) – The Domestic RHI will be extended till the 31st March 2022, a new allocation of flexible tariff guarantees will be introduced to the Non-Domestic RHI in March 2021.


  • Carbon Price Support (CPS) – The government is freezing the rate of the CPS at £18t/CO2e in 2021-22. Alongside wider carbon pricing policies, this will continue to encourage decarbonisation of the power sector.


  • Green Gas Levy – To aid in an effort to increase the amount of green gas available to consumers the government have announced they will open a consultation on the creation of a new levy to fund the development of biomethane initiatives.


  • Carbon Pricing – The government have announced they’re considering two options for the future of carbon pricing, the first will be a UK Emissions Trading System (ETS), which could be linked to the existing EU ETS, the alternative is the establishment of a new carbon emissions tax. Both options will be put to consultation in spring 2020.


  • Ofgem will receive £2 million to open a new office in Glasgow.