CCA (Climate Change Agreement) scheme
What is a Climate Change Agreement (CCA)?
A Climate Change Agreement (CCA) is a voluntary contract between the UK government and energy-intensive businesses to improve energy efficiency and reduce carbon emissions. In exchange for meeting specific targets, businesses benefit from reduced Climate Change Levy (CCL) rates on their energy bills.
CCAs aim to help industries lower their environmental impact while maintaining economic competitiveness. They involve setting and achieving energy efficiency goals over a defined period, with regular monitoring and reporting to ensure compliance. CCAs are part of the UK’s broader strategy to mitigate climate change and support sustainable industrial practices.
CCA targets and obligations
Businesses entering into a CCA must commit to:
- Achieving specified energy efficiency targets
- Regularly monitoring and reporting energy use
Failure to meet targets may result in penalties or loss of CCL discount benefits.
CCA benefits
By participating in a CCA, your business can enjoy:
- Reduced rates on the Climate Change Levy (CCL)
- Enhanced energy efficiency
- Lower operational costs
- Contribution to national environmental goals
CCA compliance and enforcement
If your business fails to meet the agreed targets:
- You may face penalties
- Reduced CCL rates may be withdrawn
- Corrective actions may be required
Who manages the Climate Change Agreement (CCA) scheme?
Climate Change Agreements (CCAs) are managed by the Environment Agency in England. This agency oversees setting energy efficiency targets, tracking progress, and verifying data. They ensure businesses meet the terms of their agreements. Sector associations or trade bodies help businesses in specific industries apply for and manage their CCAs. This setup helps the UK achieve its climate change and energy efficiency goals.
CCA eligibility
To participate in a CCA, your business must:
- Operate within an energy-intensive sector
- Meet specific energy usage criteria
Eligible sectors include manufacturing, chemicals, paper, food processing, and more. Check the full list of eligible sectors to see if your business qualifies.
CCA application process
Applying for a CCA involves the following steps:
- Initial Assessment: Determine if your business meets the eligibility criteria.
- Prepare Documentation: Gather necessary documents, including energy usage data and business details.
- Submit Application: Apply through your sector association or directly with the Environment Agency.
- Review and Approval: Your application will be reviewed, and you will be notified of the outcome.
Are you ready to improve your energy outlook? Get in touch with the team at Consultiv Utilities today.
FAQs
What is the 70:30 rule relating to CCAs?
Here are the key principles of this rule:
- If an installation consumes 70% or more of the site’s total primary energy (also known as reckonable energy), the operator can claim that all of the site’s energy consumption qualifies as part of the eligible facility.
- If the installation consumes less than 70% of the site’s primary energy, the operator can still claim the installation’s energy consumption. Additionally, they can claim the energy used by other activities on site, up to an extra 3/7ths of the installation’s energy consumption, as part of the eligible facility. To apply the 3/7ths provision, both the installation and the additional energy must be separately sub-metered. Furthermore, it’s important to note that this additional 3/7ths energy cannot be added during the last two months of a Target Period within the CCA.
When will the CCA scheme run until?
In the Spring Budget of 2023, the government announced a two-year extension of the Climate Change Agreement (CCA) scheme, extending it until March 31, 2027. Consequently, CCA participants who achieve the set energy efficiency targets will qualify for reduced Climate Change Levy (CCL) rates in the fiscal years 2025-26 and 2026-27. The extension will also be available to new participants in sectors that are currently eligible.
What happens if we don't meet our CCA targets?
You may face penalties, including the loss of reduced CCL rates.
How often do we need to report our energy usage?
Reporting typically occurs annually, but specific requirements will be outlined in your agreement.
Can any business apply for a CCA?
Only businesses within eligible sectors that meet the energy usage criteria can apply.
