Government reveals details of new 6-year Climate Change Agreements Scheme

The government has published its plans for a new Climate Change Agreements (CCA) scheme, offering tax incentives for industrial energy efficiency.  

The CCA scheme is voluntary and was first established in 2001 to drive investment in energy abatement or decarbonisation measures. In return for meeting targets, industrial businesses receive significantly reduced rates of Climate Change Levy (CCL) – a tax added to energy bills. The government estimates these savings to be worth around £310m per year in 2027-28 and 2028 – 29 for the period of the latest CCA extension.

The new scheme had already been announced by the previous government in the 2023 Autumn Statement. This latest update confirms that the new government will press ahead with the new scheme, as well as laying out the finer detail.

New CCA scheme – an overview

• Target Period and Certification Period dates – The start date of the first Target Period of the new scheme will be 1 January 2026, and set targets to the end of 2030. It will provide CCL reduced rates for those meeting their obligations until March 2033.
• Existing participating facilities will not automatically be transferred to the new scheme. All facilities will be asked to confirm that they meet the existing eligibility criteria before the start of the new scheme, and the administrator will subsequently audit a proportion of participants to assess whether they meet existing eligibility criteria.
• New entrants in existing sectors will be able to join the scheme between 1 January to 31 August in every year throughout the scheme and will not be required to wait a minimum period before being certified to receive CCL relief. There will be an additional application window, which will run from 1 May – 31 August 2025, for new entrants to apply before the start of the new scheme.
• New sectors: Sectors/processes who expressed an interest in joining the scheme will be assessed against eligibility criteria. They need to evidence that either their energy costs:
  • amount to at least 10% of their production value (i.e. Energy Intensity (EI) ≥ 10%); or
  • amount to 3% or more but less than 10% of their production value so long as there is an Import Penetration (IP) ratio of at least 50% (i.e. 3% ≤ EI < 10% and IP ≥ 50%).

The indicative timing for decisions is Spring 2025. It is likely that new sectors will not be able to join until 1 January 2027.

• Reporting: The new scheme will move to facility level reporting, and there will be a new requirement for light touch annual reporting on energy usage and emissions data at the end of year one of a two-year Target Period (which will not be used to formally assess performance).

Target Period dates:

• Target Period 1: 1 January 2026 to 31 December 2026
• Target Period 2: 1 January 2027 to 31 December 2028
• Target Period 3: 1 January 2029 to 31 December 2030

Certification Period dates:

• Certification Period 1: 1 July 2027 to 30 June 2029
• Certification Period 2: 1 July 2029 to 30 June 2031
• Certification Period 3: 1 July 2031 to 31 March 2033

Sustainable Energy First is supporting many clients with CCA scheme entry and ongoing reporting. We can also help you meet your energy efficiency targets, by identifying the most effective abatement measures. For advice and support, get in touch.