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Update: Climate Change Agreement

Update: Climate Change Agreement

The government confirmed on 15 March, 2023, that the current scheme would be extended. Targets will be in place from 1 January 2024 to 31 December 2024, with performance against those targets allowing eligible businesses to continue to receive lower CCL rates for another two years, until 31 March 2027.

The Climate Change Agreements (CCA) scheme is a voluntary scheme that encourages businesses in a wide range of industrial sectors with energy-intensive processes, such as chemicals, paper, and ceramics, to invest in energy efficiency measures in exchange for lower rates of the Climate Change Levy (CCL). This contributes directly to an energy-efficient, low-carbon future.

The current scheme's targets expired on 31 December 2022, with reduced CCL rates available until 31 March 2025 for those who met the scheme's targets and other obligations. Following the extension, the Industrial Decarbonisation Strategy committed to further assessing the purpose and targeting of a long-term CCA scheme.

What does this mean for businesses already in a CCA?

  • The update gives you more clarity: future CCL savings are now secured under the current CCA scheme until at least 2027, subject to meeting targets/paying carbon buyout costs.
  • Current CCA holders will be back under target in 2024, and with increased carbon charges for failing sites, and reporting requirements, you should start planning soon.
  • The newly announced Target Period 6 will be in place from 1st January 2024 to 31st December 2024, with the base year set as 2018. Performance against those targets will allow reduced rates of the Climate Change Levy (CCL) to be available for eligible businesses for further two years until 31 March 227.
  • Other important details to note include that no surplus CO2 is to be carried forward from TP5 and the buyout price will increase from £18/tCO2e to £25/tCO2e.

What does this mean for new eligible businesses?

  • The scheme will be open to new entrants between May and September 2023.
  • Any organisations who are successful in their application would be eligible to claim the reduced rates of the Climate Change Levy (CCL) from the 1st of January 2024 or from the date where the operator provides their assent to the proposed agreement if later than the 1st of January 2024.
  • Increased CCA coverage - If you do not currently hold a CCA and are in an eligible sector, you need to act now to ensure you do not miss the application window when it opens.
  • With a CCA in place you could apply for up to a 92% saving of your electricity CCL charges and an 88% saving on gas.

On the 1st of April 2023, the CCL exemptions for gas increased by 2%, from 86% to 88%, please see in the table below:

Our customers will need to fill out a new PP11 form to obtain the extra 2% relief should this be applicable to your organisation.

What service are we offering to customers in relation to this?

  • If you’re in a CCA already and you need some support, please get in touch. As target setting looks to become more specific, we can help you to understand these changes and what they mean for your business.
  • If you believe that your business will be eligible for a CCA, get in touch with us for a FREE CCA eligibility assessment.