Government consults on extending Climate Change Agreements scheme

The government has launched a consultation on proposals to extend the Climate Change Agreements (CCA) scheme, as well as re-opening the scheme to new entrants.

The consultation is open for two months and also seeks views on potential reforms.

The CCA is a voluntary scheme that encourages a wide range of industrial sectors with energy-intensive processes to invest in energy efficiency measures in return for reduced main rates of Climate Change Levy (CCL).

The scheme sets targets which provide a basis on which organisations can make improvements to the energy efficiency of their facilities over an 8 year period, ensuring their contribution to UK-wide goals, in return for a discount worth in total an estimated £300m annually on their Climate Change Levy bills.

The main proposals at a glance:

  • Extension: A two year extension to the existing CCA Scheme.
  • Target Period 5: Addition of a new Target Period (TP5): from 1 January 2021 to 31 December 2022.
  • Climate Change Levy (CCL): Extending the CCL discount for participants meeting obligations to 31 March 2025.
  • New entrants: Re-opening the CCA scheme to new entrant CCA applications (businesses can apply now for their facilities to join the CCA scheme, although approval is subject to the outcome of the consultation).
  • Base year: The proposed new baseline for Target Period 5 is 2018 for all target units.
  • Target Period 5 target: Final targets for TP5 will be agreed through a target negotiation process between BEIS and the sector associations
  • Surplus: Any banked surplus from TP1 to TP4 would not be allowed to be carried over into TP5.
  • Buy-out price: An increase in the buy-out price is proposed from £14/tCO2e to £18/tCO2e for TP5.
  • Future CCA scheme: The consultation also seeks initial views on potential reforms were there to be a longer term future CCA scheme.

Dates and deadlines

The consultation is open until 11 June 2020. Applications for new entrants close on 30 September 2020.