New Climate Change Agreement scheme – what you need to know.

Designed to incentivise industrial energy efficiency, the government has re-vamped the Climate Change Agreement scheme. The details of the changes are outlined below.

The CCA scheme is a voluntary scheme that allows certain energy-intensive organisations to claim back money for their energy usage. Is your organisation eligible?

Here’s what you need to know:

• New applications to the scheme will be accepted from 1st May 2025.
• The Climate Change Agreement (CCA) has changed so even if you are already in the CCA scheme – you need to re-apply.
• The compliance date is 31st August.
• DESNZ will be enforcing adherence more rigorously with fines for non-compliance.
• Some organisations are able to reclaim previous overpayment of green levies.

Background

Climate Change Agreements have been in place in the UK for over 20 years, offering energy-intensive businesses the opportunity to reduce their green levies by meeting energy efficiency targets. Introduced in 2001, the CCA scheme encourages businesses in certain industrial sectors to cut energy use and carbon emissions in return for lower rates on the Climate Change Levy (CCL), a tax on energy bills.

How does the scheme work?

CCAs are available to a wide range of industries, from major energy-intensive sectors like steel, glass, data centres and textiles manufacturing to transportation logistics and intensive dairy farming. Businesses with a CCA must monitor and report their energy consumption and carbon emissions against agreed targets in two-year reporting periods.

Overview of changes to the scheme

The Government has committed to a Climate Change Agreement scheme for a further six years, with reduced Climate Change Levy (CCL) rates until March 2033.

Importantly, existing participants will not automatically be rolled into the new scheme. Each facility must reconfirm its eligibility before the new scheme begins, and a proportion of participants will be subject to audits to verify compliance with the eligibility requirements.

New entrants in existing sectors will be able to apply to join the new scheme from 1 May to 31 August 2025, using current eligibility criteria as set out in the existing legislation.

Some Associations have notified DESNZ of their intention to register a new sector or for a new process to be added to the scheme however these applications to join the scheme under these new sectors will not be available until at least 2027.

The adherence to the 70/30 rule will now be enforced more vigorously and an annual declaration will be required.

The new scheme will move to facility level reporting only (no bubbling of facilities). Light touch annual reporting on energy usage and emissions data will be introduced at the end of year one of a two-year Target Period (which will not be used to formally assess performance).

Key dates

Target Periods:

• 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

It is strongly recommended that existing scheme members review and update their evidence packs (and particularly identifying/updating process flow diagrams/descriptions and reconfirming their 70/30 evaluation is compliant) well before the 31^st August 2025 and any possible audit by the Environment Agency. New entrants should start compiling their application evidence now to be in the best position when the application window opens on the 1^st May 2025.

Evidence packs must include all of the following:-

• Site map showing:-
  • site boundary,Utility meter locations and ID numbers
  • boundaries/areas of the Statutory Technical Unit (STU)
  • boundaries/areas of Directly Associated Activity (DAA)
  • boundaries/areas of Non-Eligible Activity
• Location plan for the site
• Overall site process description
• Process Description for each eligible process
• Description of Directly Associated Activities (DAA) associated with each eligible process
• Process flow diagrams for each eligible process, highlighting
  • Eligible process steps
  • Non-eligible process steps
  • Process Directly Associated Activity (DAA)
• 70/30 assessment reviewed in the last 12 months
• Energy (invoices etc) and production/target data for the baseline (2022) and reporting years
• PP10 and PP11 forms covering the period where CCL relief is claimed
• Copy of the sites underlying agreement
• Performance to target calculation and submission data

Free CCA clinics available 30^th January and 6^th February 2025

JRP can assist in reviewing and updating your evidence pack, determining your eligibility, help with the application process, and manage ongoing compliance. Additionally, we can help identify energy efficiency opportunities and support their implementation.

With greater than 25 years’ experience across all sectors and industries, JRP experts can offer valuable insights and solutions for any Net Zero or energy management issue.

Book your free clinic here

If there is a specific date or time that works better for you, please reach out and we will try to accommodate. Call us on 0800 6127 567 or email owen.jones@jrpsolutions.com. 

This article appeared in the Jan/Feb 2025 issue of Energy Manager magazine. Subscribe here.