A quick guide to Climate Change Agreements

Businesses in certain sectors can get lower charges on their energy bills through a Climate Change Agreement (CCA). 2026 saw the start of a new six-year phase for this scheme. Here is Sustainable Energy First’s quick guide.

What is a Climate Change Agreement?

A Climate Change Agreement (CCA) is a voluntary agreement a UK business makes to reduce its energy use and carbon emissions. How it works:

• The Environment Agency sets the business a target
• If this is achieved, the business gets a rebate on its Climate Change Levy (CCL), which means a lower energy bill.

How can you save money with a CCA?

You save with a CCA by getting a partial refund on the Climate Change Levy (CCL) that was added to your energy bill. The CCL is a tax designed to encourage energy-intensive businesses to reduce their energy consumption by making it more expensive. If your business is over the consumption threshold, the CCL is added to your energy bills by your supplier.

The CCL rate varies, but as of April 2026 the main rate is £0.00801 per kWh for electricity and £0.00801 for gas. So, for example, if you’re paying 25p/kWh for your electricity, the CCL would add an extra 3.2% to your electricity bills. Signing a CCA lets you claim a rebate of:

• Up to 90% on the CCL for electricity;
• Up to 65% for other fuels, including LPG.

Who is eligible for a Climate Change Agreement?

To be eligible, your business needs to be engaged in energy-intensive processes on the government-approved list. The full list of eligible processes is available in the official CCA operations manual. It includes many types of work, from supplying animal feed to laundering textiles. Three new processes are scheduled to be added to the list, probably from early 2027.

What’s new in the current phase?

Climate Change Agreements have been going since 2001, but in October 2024 the government announced that it would be introducing an updated version of the scheme. This new version, named CCA3, began on 1 January 2026, and there are three main things to note:

1. Existing entrants need to reapply

The Department for Energy Security and Net Zero (DESNZ) is treating the current incarnation of the CCA Scheme as separate from previous versions. So even if your business previously had a Climate Change Agreement in place, you still need to apply for the new one. However, there has been some help with the transition.

The government set two certification periods in which existing participants could apply again:

• Certification Period 6 (CP6) ran from 1 July 2023 to 30 June 2025.
• Certification Period 7 (CP7) began in 1 July 2025 and runs through to 31 March 2027.

The timing of these certification periods means existing participants can avoid a gap in receiving their CCL relief under the scheme.

CCA3 is separate from previous versions of the CCA scheme, so previous entrants still need to apply – but can keep receiving CCL relief with no gaps.

2. Targets set at facility level

There are various differences between the old and new versions of the CCA scheme, but the main one is how targets are applied.

• Then: you could group business facilities together in a “bubble” and agree a combined target.
• Now: targets are set at facility level.

The idea behind the change is that having facility-specific targets gives every business site its own incentive to save energy and decarbonise.

3. New sectors becoming eligible

The government has consulted on the possibility of allowing three more industry sectors to join the CCA scheme. These are:

• Production of EV batteries
• Packaging of spirits
• Mechanical recycling of plastics

The decision to let them all join was announced in October 2025, but the measure is still waiting for House of Commons approval. We expect that they will be allowed to join from January 2027.

Target periods

Climate Change Agreements have always set a baseline year to use as your starting point, then a target period in which you have to achieve the reductions agreed. This is normally 2022, although there are some exceptions.

Although the current phase of the CCA scheme is separate from previous ones, DESNZ has continued the numbering of the target phases. So the first target period for this phase is known as Target Period (TP) 7, the second is TP8 and so on. 

TP7 runs from 1 January 2026 to 31 December 2026.

New entrants: getting started

A “new entrant” is defined as a business that wasn’t already part of the CCA scheme when the new version began at the start of 2026.

That might mean:

• You’re a new business joining for the first time; or
• You previously had a CCA but no longer have one; or
• You’re an established business in a sector that’s just become eligible.

The application window for new entrants is between 1 January and 31 August every year.

If the work of your business is on the eligible list, you start the application process by contacting your sector association (for example, if you make paint tins you would contact the Metal Packaging Manufacturers’ Association). They will set you up with an online account to manage your application.

How is our CCA target calculated?

Your company’s CCA target depends on what sector you’re in and what commitment your sector association has made for that industry as a whole.

The Environment Agency sets targets against a base year of 2022. So new entrants to the scheme have to provide full data for the whole of 2022 in order to establish a starting point for future reductions.

Sector associations have a new commitment for each target period, with the energy and carbon reductions increasing over time.

As you’ve read, we’re currently in Target Period 7, which is the first of the new scheme.

The second target period (confusingly known as TP8, as we’ve explained above) runs from 1 January 2027 to 31 December 2028. Because TP8 is two years long, the scheme will require a progress update halfway through. This doesn’t have to be as rigorous as your full end-of-period report.

Why get a CCA?

Because CCAs are developed with your sector association, they’re realistic for the type of industry your business operates in. Many businesses are already working to reduce their energy consumption and associated emissions, for several reasons:

• To save money at a time of rising energy costs
• To comply with legislative schemes like ESOS
• To achieve voluntary net-zero targets

Signing a Climate Change Agreement provides an additional reward for this work in the shape of a small but significant tax break. But the real payoff from implementing energy efficiency measures is the long-term savings your business will get on its energy bills.

Questions?

If you would like advice on eligibility for the new scheme, support with the application process or ongoing compliance, get in touch with Sustainable Energy First via the form below.