As part of their spring budget the Government announced that Climate Change Agreements (CCA’s) would be extended to 2025 for existing participants and for the first time since 2018 the scheme would be re-opened to new applicants.
What is a CCA?
A Climate Change Agreement (CCA) is a voluntary agreement between UK businesses and the Environment Agency to reduce use and CO2 emissions over time. Business must commit to pre-determined energy efficiency targets. In return, these businesses receive up to a 90% discount on Climate Change Levy (CCL) element of their fuel and utility bills. In short, taking advantage of the CCA scheme helps both the environment and the business' bottom line.
Who is eligible?
A wide range of UK businesses are eligible, mainly related to the manufacturing sectors. But other energy-intensive activities also qualify, such as agricultural operations, cold storage facilities, data centres and large supermarkets. Eligible processes are listed here under Appendix A on page 102 of the document.
How do they work and what are the benefits?
A business that has a CCA will measure and report its energy use and carbon emissions against agreed targets over set reporting periods – and if the business meets its targets at each stage, it will continue to be eligible for the CCL discount. This could be up to 90% on your electricity bill’s CCL element, and 65% on other fuels. Depending on your business, this can lead to savings of thousands of pounds per year.
What's the downside?
A climate change agreement, however, is not for everyone and this is not just down to whether you meet the criteria. Yes, there are benefits such as a structured approach to energy management and reduced Climate Change Levy (CCL) costs, however this is a commitment with targets set. If the targets are not met then there are financial penalties imposed. There are also costs involved in joining and remaining part of the CCA scheme payable to both your sector association and the Environment Agency. The potrntail savings need to be balanced against the costs.
How do I find out more?
CCA are administered via the trade sector associations. The link to the full list of sectors covered is here.
Is there a deadline?
Yes. New applications need to be submitted by September 2020.
General government advice can be found here.