An agreement between the Government and a business user, whereby a reduced rate of Climate Change Levy is payable in return for a commitment by the user to achieve certain pre-determined targets for energy usage or carbon emissions. Failure to achieve the agreed reductions means any CCL discounts must be returned to HMRC.

A system in which fuel is used to simultaneously produce electrical (or mechanical) power plus recovers useful thermal energy for use in cooling & heating.

CCL is a government-imposed tax designed to encourage the reduction of greenhouse gas emissions and improve energy efficiency in business and non-domestic use. It is charged only on energy consumption (kWh) and does not apply to other bill components, such as standing charges. The rate of CCL is index-linked and typically increases on 1 April each year.

Under current legislation:

• Where VAT is charged at the standard rate, CCL (plus VAT on CCL) will usually be applied
• Where VAT is charged at the reduced rate, the supply is automatically exempt from CCL

If VAT is charged at the standard rate but a site is eligible for full or partial CCL relief, a PP11 Supplier Certificate must be submitted for each site to confirm the applicable relief percentage.

PP11 Supplier Certificates are issued by HM Revenue & Customs (HMRC) and can be downloaded from their website: www.hmrc.gov.uk. Please note that these certificates are not transferable between suppliers.

Carbon capture and storage (CCS) – or carbon capture, utilisation and storage (CCUS) – is a climate mitigation technology that captures carbon dioxide (CO₂) emissions from industrial processes or power generation before they enter the atmosphere. The captured CO₂ can either be stored underground in geological formations (CCS) or reused in products like fuels or building materials (CCUS). While not a silver bullet and not without cost or technical challenges, these technologies can play a valuable role in reducing emissions from sectors that are difficult to decarbonise, such as cement, steel and chemicals.

Government scheme to support new investment in low carbon generation. This scheme replaced the Renewable Obligation Scheme.

It is now the UK govt’s primary mechanism for supporting low-carbon electricity generation, providing developers with long-term (15-20 years) revenue stability. It reduces risk from volatile wholesale prices by guaranteeing a set strike price for electricity, paying top-ups when market prices are lower and requiring repayments when they are higher. 

Contracts and all payments to and from generators are held and managed by the Low Carbon Contracts Company (LCCC) – see LCCC and ESC section below.

Combined Heat and Power (CHP) is a process that captures and utilises the waste heat produced by the electricity generation process.

The heat can then be used to provide useful thermal energy – such as steam or hot water – for space heating, cooling and industrial processes. CHP plants are typically installed at facilities where there is a need for both electricity and thermal energy – including industrial sites, hotels, health clubs and leisure centres, commercial buildings and apartment complexes.

A variety of fuel sources can be used in the CHP process – from both renewables and fossil fuels – including natural gas, coal, biomass, biogas and municipal waste.

The Commercial Operation Date refers to the date at which the renewable asset:

1. becomes fully operational
2. has a grid connection
3. starts producing energy

Under a PPA contract, COD also indicates a point, from which the obligation of an off-taker to buy the energy begins.

A corporate power purchase agreement, or CPPA, is a long-term contract under which a business agrees to buy some or all of its electricity directly from a renewable energy generator, such as a solar or wind farm (which is connected to the grid or a private wire connection). This differs from the traditional approach of simply buying electricity from licensed electricity suppliers. CPPAs help to finance renewable energy projects, as they give generators a guaranteed buyer and revenue stream for the energy they produce.

Explore our full guide on CPPAs.

The CRC is a UK government emissions trading scheme for large organisations which are not already covered by Climate Change Agreements or were not eligible for EU Emissions Trading. This includes banks, large offices, universities, large hospitals, large local authorities and central government departments. The scheme is mandatory. The CRC was expected to deliver emissions reductions totalling 0.5m tonnes of carbon (Mtc) per year by 2015. The scheme officially closed following the 2018-19 compliance year with reporting required by Mar 19 and records to be kept until 2025.

The CRC scheme was replaced by the Streamlined Energy and Carbon Reporting Framework (see our SECR FAQs, here) which came into force on 1st Apr 2019.

CSR refers to the policies and practices an organisation undertakes to make a positive impact on the world through their actions to society, the environment and economy. CSR and ESG are related, but there is a difference. ESG performance is assessed using set metrics, by investors and other stakeholders. CSR is a more qualitative, self-regulated approach that is not directly related to financial performance and business valuation. ESG is overtaking CSR as a method of reporting.

Metering that is 100 amp and above.

Amount of heat given by the specified quantity of gas. This is used to calculate the energy consumed based on the volume of gas used. It is measured in joules per kilogram.

A set charge by the local Distribution Network Operator (DNO) for investment and maintenance of the electricity network, based on the Agreed Capacity of a property. This can also be called the Availability Charge or Maximum Import Capacity (MIC).

Not to be confused with Capacity Charges nor Maximum Import Capacity, the Capacity Mechanism is a Govt scheme administered by the Electricity Settlements Company (ESC).

This mechanism is designed to ensure security of supply by providing payment to generators and demand-side response providers for being able to make their power available to the grid during periods of high demand. It is essentially an insurance policy against the possibility of blackouts.

The scheme organises annual auctions to secure Capacity Agreements (contracts) with payments based on the clearing price. The main auction is the T-4 auction, held 4 years in advance for long term security, then there is a “top up” T-1 auction which is 1 year before the delivery year.

The Capacity Mechanism costs are passed onto the supplier based on their market share during the “peak” demand periods (which are Nov-Feb, Mon to Fri, and 16:00 to 19:00) – the costs are then passed on to the end user as part of the supplier bills.

This is short for carbon dioxide (CO2) emissions. CO2 is one of several different greenhouse gases in the earth’s atmosphere that trap heat. As well as being released through natural processes, it is also released by humans burning fossil fuels for such as coal, oil and natural gas. Due to its abundance, CO2 is the main contributor to climate change. For that reason, the term “carbon emissions” is often used interchangeably with the term “greenhouse gas emissions.”

This is the amount of greenhouse gases emitted from the activities of a particular individual, organisation, or community. For example, a person’s carbon footprint would include the GHG emissions from the production of the food they eat and the products they buy, the transport and energy they use to travel and heat their homes.

For more information on finding the carbon footprint of a business, see ‘Scope 1-3 Emissions’

Like carbon offsetting, carbon insetting involves investing in carbon reduction or sequestration projects to compensate for emissions released. But whereas offsetting projects can take place anywhere, insetting must take place within your company’s value chain. For example, while traditional offsetting might involve choosing a renewables project to invest in, carbon insetting might involve setting up your own renewables project onsite. It offers businesses more control and oversight, and makes it easy to verify that a project is truly additional.

Read our guide to carbon insetting.

Carbon negative means removing more carbon than you emit each year, through natural carbon sinks (e.g. forests) or technologies such as carbon capture and storage. It goes one step further than “net zero”.

Read our guide to carbon negative.

Corporate power purchase Becoming carbon neutral means reducing your carbon emissions as much as possible, and compensating for any remaining emissions by offsetting. It can cover a defined part of business operations, and typically accounts for just carbon dioxide (CO2). Net zero is similar but is used to describe all human-made greenhouse gas emissions (not just CO2).

Offsetting is where companies invest in external carbon reduction projects as a way of compensating for emissions that they have not yet removed. Projects include funding tree-planting schemes to create natural carbon sinks, or investing in clean energy infrastructure.

For offsets to be considered, they need to ensure environmental integrity, they need to be real, measurable, genuinely additional (i.e., the reductions wouldn’t have occurred without the offset project) and achieve emissions reductions.

A tax levied on fossil fuel usage usually based on the carbon content – generally designed to curb use rather than just raise revenue.

A fee levied by National Grid on the quantity of gas transported through the system.

A document which states the Agreed Capacity for a property with the local Distribution Network Operator (DNO).

For sites using large amounts of gas it is often deemed necessary to measure the temperature and pressure variations more accurately rather than just applying a fixed conversion factor. In these cases an additional “corrector” meter is attached to the meter.

A gas bill correction factor (typically 1.02264 in the UK) is a multiplier applied to the volume of gas measured at a property to adjust for pressure and temperature changes. It ensures accurate billing by converting the measured, often compressed, volume into a standardised volume, accounting for energy value.