CCA & CCL Explained

Climate change agreement are voluntary agreements made between UK industry and the Environment Agency to reduce energy use and carbon dioxide (CO2) emissions. In return, operators receive a discount on the Climate Change Levy (CCL), a tax added to electricity and fuel bills. The Environment Agency administers the CCA scheme on behalf of the whole of the UK.

In 2015, 196 countries came together and signed the Paris Agreement, which was designed to limit global warming to well below 2 degrees Celsius above pre-industrial levels. The UK was one of these countries, and as part of this commitment, the UK government set itself the target of achieving net-zero carbon emissions by 2050. To help achieve this goal, furthermore the UK government has extended the Climate Change Agreement (CCA) until 2027. This extension will have a significant impact on businesses and their energy costs.

The CCA is a voluntary scheme that allows eligible UK businesses to reduce their energy costs by up to 90% in exchange for implementing energy efficiency measures and reducing their carbon emissions. The scheme was first introduced in 2001 and has been extended several times since. The latest extension to 2027 has been introduced to help the UK meet its climate change targets.

Why was the scheme initially introduced?

Under the CCA, businesses can receive a discount on the Climate Change Levy (CCL), if they meet certain energy efficiency targets. The CCL was introduced as part of the government’s efforts to reduce greenhouse gas emissions. The CCL is a tax on the consumption of electricity, gas, and other fuels. The revenue generated from the tax is used to support renewable energy projects and other measures to reduce carbon emissions.

Why has the CCA been extended & how does it effect my business?

By extending the CCA until 2027, the UK government is sending a clear message to businesses that they need to take action to reduce their carbon emissions. This message is particularly important given the increasing urgency of the climate crisis and the need for businesses to play their part in reducing carbon emissions.

For businesses, the extension of the CCA will have both benefits and challenges. On the one hand, businesses that take part in the scheme can benefit from reduced energy costs, which can help improve their bottom line. This is particularly important for energy-intensive businesses, such as those in the manufacturing sector for example, which can benefit significantly from the scheme.

On the other hand, the CCA places certain obligations on businesses, which can be challenging to meet. For example, businesses must submit regular reports on their energy use and carbon emissions, which can be time-consuming if you don’t have an energy partner or energy expert to hand such as Enexus.

However, the benefits of the CCA are likely to outweigh the challenges for most businesses. By reducing their energy costs, businesses can improve their competitiveness and profitability. In addition, by taking action to reduce their carbon emissions, businesses can enhance their reputation and appeal to environmentally-conscious consumers.

What impact will the extension have?

The extension of the CCA is also likely to have a broader impact on the UK economy. By encouraging businesses to reduce their energy use and carbon emissions, the scheme can help improve the UK’s energy security and reduce the country’s reliance on imported fossil fuels. In addition, the scheme can help create jobs in the renewable energy sector and other industries that support the transition to a low-carbon economy.

So, what impact will the CCA extension have on businesses and their energy costs? Firstly, businesses will need to set new targets for reducing their carbon emissions. These targets are likely to be more ambitious than the previous targets, reflecting the UK’s goal of achieving net-zero carbon emissions by 2050.

Investing in new technologies and processes is likely to play a huge part, however this can be expensive, which is why the CCL discount is so important. The discount helps to offset the cost of these investments, making them more affordable for businesses. The CCA extension means that businesses will continue to receive this discount until 2027, providing them with financial support as they work towards meeting their new, more ambitious targets.

How successful has the scheme been so far?

So far the CCA has been successful in reducing carbon emissions in the UK, with participating businesses reducing their emissions by 22% between 2010 and 2019 and In 2021/2022, it’s estimated that the scheme has saved UK companies over £225 million in total.However, there is still a long way to go to meet the UK’s target of net-zero carbon emissions by 2050. The CCA extension is an important step towards achieving this goal.

What types of businesses can apply?

If you’re unsure as whether or not your business can apply, Enexus are always on hand to guide you through the various stages, however the published industries/sectors that need to be more aware of the scheme are:

. Aerospace

. Aluminium

. Agricultural Supply

. Wallcoverings

. Textiles

. Textiles Energy Intensive

. Cement

. Ceramics

. Calcium Carbonate

. Compressed Gases

. Egg Processing

. Glass

. Lime

. Brewing

. Meat

. Geosynthetics Non-Woven

. Poultry Meat Rearing

. Poultry Meat Processing

. Plastics

. Printing

. Tyres

. Foundries

. Metalforming

. Chemicals

. Timber Sawmilling

. Paper

. Cold Storage

. Data Centres

. Dairy

. Eurisol / Mineral Wool

. Food and Drink

. Supermarkets

. Gypsum Products

. Kaolin and Ball Clay

. Malting

. Metal Packaging

. Bakers

. Non-Ferrous Metals

. Pigs 

. Horticulture

. Eggs & Poultry Meat

. Semiconductors

. Packaging & Industrial Films

. Surface Engineering

. Spirits

. Surface Engineering Heat Treatment

. Slag Grinding

. Motor Manufacturing

. Laundries

. Leather

. Rendering

. Steel

. Wood Panels

There are of course inclusions and exclusions to the above sectors dependant on your processes, therefore we would recommend engaging with one of our Business Energy Experts before proceeding.

More information is also available here.

What next…

In conclusion, the extension of the CCA until 2027 is an important step towards achieving the UK’s goal of net-zero carbon emissions by 2050.

It’s been estimated that a Climate Change Agreement (CCA) could potentially save companies in the region of £125k between January 2024 and April 2027 and all new successful applicants will start benefiting from1st January 2024. 

The Climate Change Agreement application window opened for new entrants on 1st May 2023 – closing on 30th September 2023, so there’s only a small window of opportunity to take advantage.

If you’re unsure as to whether or not your business is eligible for the Climate Change Agreement or if you’d simply like to find out more, our expert energy consultants are always on hand to offer advice.