The UK has expanded exemptions under the Climate Change Levy to include electricity and natural gas used in hydrogen and sodium bicarbonate production, effective from 12 March 2026.
The UK has amended its Climate Change Levy (CCL) rules with the introduction of the Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026, made on 11 March 2026 and effective from 12 March 2026.
The regulations update the Climate Change Levy (Fuel Use and Recycling Processes) Regulations 2005, broadening the list of industrial processes recognised as “non-fuel uses.”
Under the CCL framework, while electricity, gas, and solid fuels are generally subject to taxation, supplies intended for non-fuel applications are exempt.
Two specific processes have been added to the exemption list:
- Hydrogen production: Electricity used in electrolysis to produce hydrogen is now classified under wholly non-fuel uses (Part A of Schedule 1).
- Sodium bicarbonate production: Natural gas used as a source of carbon dioxide to produce sodium bicarbonate from soda ash is included under mixed uses (Part B of Schedule 1).
By formally recognising these applications as non-fuel uses, the government ensures that the associated electricity and natural gas are exempt from the Climate Change Levy.
