Government confirms plans for new Climate Change Agreements Scheme
The government has outlined the finer details of a revamped Climate Change Agreements (CCA) scheme, designed to incentivise industrial energy efficiency.
The CCA scheme, first introduced in 2001, encourages businesses in eligible industrial sectors to reduce energy consumption and carbon emissions in exchange for lower rates of the Climate Change Levy (CCL), a tax added to energy bills.
Highlights of the new CCA scheme
- Start dates and duration: The new scheme will begin its first Target Period on 1 January 2026, with set targets extending through the end of 2030. Participants meeting their energy efficiency goals will benefit from reduced CCL rates until March 2033.
- Transfer and eligibility: 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.
- Opportunities for new entrants: Businesses in sectors already participating in the scheme will be able to join between 1 January and 31 August each year, with no waiting period for certification to receive CCL reductions. Additionally, a special application window from 1 May to 31 August 2025 will allow new entrants to join the scheme in time for its official launch.
- New sectors: Industrial sectors seeking to join the scheme will be assessed based on eligibility criteria. To qualify, sectors must demonstrate that:
- Their energy expenses account for at least 10% of production value (Energy Intensity (EI) ≥ 10%); or
- Their energy costs represent between 3% and 10% of production value, with an Import Penetration (IP) ratio of at least 50% (3% ≤ EI < 10% and IP ≥ 50%).
Decisions regarding new sector eligibility are expected by Spring 2025, with these sectors anticipated to join no earlier than 1 January 2027 due to parliamentary processes.
- Facility-level reporting: The new scheme will move to facility level reporting. 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 and Certification Periods
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
Certification Periods:
- Period 1: 1 July 2027 to 30 June 2029
- Period 2: 1 July 2029 to 30 June 2031
- Period 3: 1 July 2031 to 31 March 2033
For advice and support on the new CCA Scheme, get in touch. We can help determine your eligibility, manage the application process, as well as managing ongoing compliance. We’ll also identify new energy efficiency opportunities and advise on implementation.
