Climate change agreements are voluntary agreements made by 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.
If you hold a CCA you will get a discount on your CCL. See the guidance Climate Change Levy: application, rates and exemptions guidance. CCAs are available for a wide range of industry sectors from major energy-intensive processes such as chemicals, paper and supermarkets to agricultural businesses such as intensive pig and poultry farming.
There are 2 types of CCAs: Umbrella Agreements and Underlying Agreements
The Department of Energy and Climate Change and industry sectors negotiated umbrella agreements. Together they agree the energy efficiency targets for a sector – the sector commitment. The agreement is then held between the sector association and the Environment Agency; the administrator. Umbrella agreements also list the processes that are eligible for a CCA.
An underlying agreement is held by a site, or group of sites, owned by an operator within a particular sector. This contains energy or carbon efficiency targets appropriate for their type of operation. Sector associations manage the underlying agreements for businesses in their sector. An operator that wants to enter into a CCA must apply first to its sector association.
How CCAs work
The current CCA scheme started in April 2013 and will run until 31 March 2023. An operator that has a CCA will measure and report its energy use and carbon emissions against agreed targets over 4, 2-year target periods.
If an operator has more than one eligible facility in the same sector it could hold individual CCAs for each facility, or choose to group them together under one CCA. The target could then be shared across the grouped facilities. Once a facility, or group of facilities, holds a CCA, it is referred to as a target unit.
If the operator meets its targets at the end of each reporting period, it continues in the scheme and is eligible for the discount on the CCL.