The Climate Change Agreement (CCA) is set to extend two years until 2027, Jeremy Hunt announced in the Spring Budget. This means that qualifying energy intensive facilities can apply for the scheme from May to September 2023. In this article, we’ll explain CCA and the Climate Change Levy (CCL), and what impact the extension could have on your business.

Understanding the Climate Change Agreements scheme and the Climate Change Levy

The CCA scheme was first introduced in 2001. At its core, the scheme serves two purposes: 1. to increase energy and carbon savings through energy efficient practices and 2. to help reduce energy costs for energy intensive sectors by providing discounts on the Climate Change Levy for participating businesses. In 2021/22, it’s estimated that the scheme saved businesses over £225 million in total.

By improving their energy efficiency as part of the scheme, participating businesses also have the added benefit of saving on energy bills.

CCA dates to know for businesses

On 15 March 2023, the government confirmed the extension of the Climate Change Agreement scheme, with new targets in place from 1 January 2024 to 31 December 2024. As in the previous scheme, targets against those requirements allows participating businesses access to reduced rate of CCL for a further two years until 31 March 2027.

Facilities not currently in the scheme will also have opportunity to apply. The application window will be open from 1 May to 30 September 2023. Full guidelines can be found on the government website.

The current scheme targets ended on 31 December 2022 with reduced rates of the CCL until 31 March 2025 for those who complied with targets and other obligations under the scheme.

In December 2021, the government published its initial consultation that outlined key aspects for a future scheme and reforms under consideration.

How the CCA extension could impact energy intensive businesses

Qualifying organisations participating in the scheme will be able to reduce their energy consumption while saving money on the CCL. Eligible energy intensive users must apply to the scheme – it is not automatically implemented like the Energy Bill Relief Scheme. Applications are not open yet, but the government stated that there will be updates in early April.

As the energy crisis has left the UK with inflated energy rates and steep demand, these extra support mechanisms have been welcomed by energy intensive sectors. If you want to know more about whether you organisation is eligible for the scheme, or how to apply, get in touch with us for advice.