The UK government has released its response to the recent Climate Change Agreement (CCA) scheme consultation. In this blog, we have broken down the key insights from the consultation and how the changes aim to support the continuation of driving energy and carbon savings in industries, whilst supporting competitiveness and the UK's net-zero goals.
Key Highlights:
- Consultation Overview: After a consultation from November 2023 to February 2024, the government has confirmed a six-year CCA scheme. Participants who comply with energy efficiency targets will benefit from reduced Climate Change Levy (CCL) rates until March 2033.
- Financial Impact: The new scheme is expected to deliver £310 million in annual CCL relief during 2027-29, with a total value of £1.9 billion over its six-year run.
- Eligibility and Participation Changes: Current participants will need to re-confirm their eligibility, because existing participants will not be automatically transferred to the new scheme. Meanwhile new sectors and businesses can apply under revised criteria focused on energy intensity and import penetration. Newly eligible sectors can't join until 2027, while businesses in existing eligible sectors can apply between May and August 2025.
- Reporting and Simplified Processes: The scheme introduces facility-level reporting and a unified target type, streamlining compliance and reducing the administrative burden, particularly for small and medium-sized enterprises (SMEs). Additionally, the new target type eliminates many of the complex rules that applied to absolute and relative targets, simplifying the reporting and assessment process.
- Targets & Certification: The base year will be updated from 2018 to 2022. The first target period (TP1) begins on the 1st of January 2026 and ends on the 31st of December, followed by biennial target periods through to 2030. Participants must meet set targets for energy efficiency to maintain CCL relief.
Sector-Specific Considerations:
- Retail and Supermarkets: The shift to facility-level reporting is expected to have a significant impact on sectors like retail and supermarkets, where large numbers of facilities were previously bubbled together under single target units.
- Energy-Intensive Industries: Key sectors like cement, steel, chemicals, and paper will continue to play a central role in the scheme due to their high energy intensity, with tailored targets negotiated to reflect their specific energy needs.
- Food and Beverage Production: Industries such as food and beverage production, where energy consumption is critical to operations, will remain eligible, with sector-specific targets set through negotiation.
These updates reflect a significant shift toward simplifying the scheme's administration, increasing transparency through facility-level reporting, and extending the scheme's timeline to ensure participants have sufficient time to transition.
Need help with the CCA Scheme?
If you’d like to discuss the changes to the CCA scheme, whether you’re already participating or looking to join, our compliance and net zero team is on hand to provide advice on how to navigate the updated CCA scheme. Contact us here.