Essential Guide to the New Climate Change Agreement Scheme

Greetings, Net Zero News Community,

In a crucial step towards enhancing industrial energy efficiency, the UK government has announced a significant overhaul of the Climate Change Agreement (CCA) scheme. This restructured initiative is designed not only to incentivise energy-intensive organisations to optimise their energy usage but also to ensure that compliance is more rigorously enforced. Below, we delve into the vital details and implications of these changes, helping you understand how your organisation can benefit from this renewed commitment to energy efficiency.

Understanding the Climate Change Agreement Scheme

For over two decades, Climate Change Agreements have played a pivotal role in encouraging energy-intensive businesses across the UK to mitigate their carbon footprints while simultaneously reducing their energy costs. Launched in 2001, the CCA scheme allows participating organisations in specific industrial sectors to lower their Climate Change Levy (CCL)—a tax imposed on energy bills—by meeting defined energy efficiency targets.

This scheme is applicable to numerous industries, including but not limited to steel production, glass manufacturing, data centres, textiles, transportation logistics, and intensive dairy farming. To maintain their CCA status, businesses are required to monitor and report their energy consumption and carbon emissions against predetermined targets within two-year reporting periods.

The Recent Changes: What You Need to Know

As part of the government’s ongoing commitment to climate action, the CCA scheme will continue for an additional six years, maintaining reduced CCL rates until March 2033. However, significant changes have been introduced that will affect both existing participants and new applicants.

  • New Applications: From 1st May 2025, new applications will be accepted for the revamped scheme.
  • Re-application Requirement: Even if your organisation is already part of the CCA scheme, you must re-apply to remain compliant.
  • Compliance Deadline: All re-applications must be submitted by 31st August 2025.
  • Tightened Enforcement: The Department for Energy Security and Net Zero (DESNZ) will enforce compliance more rigorously, including imposing fines for non-compliance.
  • Reclaiming Overpayments: Certain organisations may reclaim previous overpayments of green levies.

Key Features of the New Scheme

One of the most noteworthy changes is the shift to facility-level reporting only, eliminating the option to “bubble” facilities together for reporting purposes. This means that each facility must account for its energy usage and emissions independently, ensuring a more precise assessment of compliance with energy efficiency targets.

Additionally, an annual declaration will now be mandatory. This declaration will be introduced at the end of the first year of each two-year target period and will provide a lighter touch on reporting energy usage and emissions data. However, it will not be used to formally assess performance.

Important Dates to Remember

The target periods for the new CCA scheme are as follows:

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

Existing members should proactively review and update their evidence packs well in advance of the re-application deadline. This preparation is crucial, particularly in ensuring compliance with the stringent 70/30 rule concerning energy efficiency evaluations.

Preparing Your Evidence Pack

To successfully re-apply for the CCA scheme, organisations must compile a comprehensive evidence pack that includes the following:

  • A site map indicating:
    • Site boundary and utility meter locations
    • Boundaries of the Statutory Technical Unit (STU)
    • Areas of Directly Associated Activity (DAA)
    • Non-eligible activity zones
  • A detailed location plan for the site
  • A comprehensive description of the overall site process
  • Process descriptions for each eligible process
  • Descriptions of DAA associated with each eligible process
  • Process flow diagrams highlighting eligible and non-eligible process steps
  • Documentation from the last 12 months reviewing compliance with the 70/30 assessment
  • Energy invoices and production/target data for baseline (2022) and reporting years
  • PP10 and PP11 forms relevant to the CCL relief period
  • A copy of the underlying agreement for the site
  • Performance calculations and submission data

Free Support Clinics Available

To assist organisations in navigating these changes, free CCA clinics are scheduled for 30th January and 6th February 2025. These sessions will provide valuable guidance on reviewing and updating evidence packs, determining eligibility, and managing ongoing compliance. Don’t miss this opportunity to ensure your organisation is well-prepared for the upcoming changes!

JRP Solutions, with over 25 years of experience across various sectors, is equipped to help your organisation meet its Net Zero goals. Our experts can offer tailored insights and solutions for any energy management challenge you may face.

If you would like to book a free clinic or have specific questions, please do not hesitate to reach out. You can contact us at 0800 6127 567 or via email at owen.jones@jrpsolutions.com.

Conclusion

In summary, the revamped Climate Change Agreement scheme represents an important step forward in the UK’s journey towards achieving net-zero emissions. By incentivising energy-intensive organisations to enhance their energy efficiency, this initiative not only contributes to the broader climate goals but also helps businesses reduce their operational costs. We encourage all eligible organisations to take note of the upcoming changes and prepare accordingly to ensure compliance and maximise their benefits.

Stay informed and proactive as we strive together towards a sustainable future. Thank you for your dedication to net-zero initiatives!

This article originally appeared in the January/February 2025 issue of Energy Manager magazine. Subscribe here.

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