Climate Change Agreements (CCAs)
Climate Change Agreements (CCAs) allow eligible energy-intensive businesses to receive up to a 90% discount from the Climate Change Levy (CCL) in return for meeting energy efficiency or carbon-saving targets.
Targets set apply to participating sectors from April 1st 2013 to 2020. The scheme runs until 2023, but the last reporting period to assess sector and operator performance is in 2020.
The purpose of Climate Change Agreements
DECC has recognised the need to give special consideration to energy-intensive industries with regards to climate change, given their energy use and their need to compete internationally.
Who is eligible?
CCAs cover a wide range of industry sectors, from major energy-intensive processes such as supermarkets, chemicals and cement, to agricultural and aerospace.
Eligibility to hold a CCA depends on the operator carrying out an ‘eligible process’. The Finance Act 2000 (as amended), which specifies eligibility through two pieces of legislation:
- The Environmental Permitting (England and Wales) Regulations 2010 (EPR) (as amended). A site will be eligible if it carries out a Part A(1) or A(2) activity listed in Part 2 of Schedule 1. (Note that eligibility for facilities in Scotland or Northern Ireland is also determined by reference to the activities listed in the EPR for England and Wales). For the purposes of the CCA scheme, thresholds in the EPR Schedule 1 activity descriptions should be ignored, with the sole exception: of the 50MW limit for combustion plant.
- The Climate Change Agreements (Eligible Facilities) Regulations 2012. A facility will be eligible if it carries out an energy-intensive process or activity detailed in the Schedule.
Smaller sites that do not meet the size thresholds of the Environmental Permitting Regulations (EPR), but otherwise would qualify, are also eligible for a CCA.
Energy-intensive industries: definitions
Energy-intensive industries were defined initially as industries covered by Part A, in Part 2 of Schedule 1 of the Environmental Permitting (England and Wales) Regulations 2010. The 2010 version of the EPR is the latest available.This definition applies throughout the UK.
In 2006, the qualifying criteria for sectors that could apply for a CCA was extended and the definition of ‘energy intensity’ expanded to include the one set out in the Energy Products Directive (which came into force on 1 January 2004). The extended criteria are as follows:
- energy intensity (EI) must be 3% or more (ie energy costs must be 3% or more of the production value for the sector)
- the industry import penetration ratio must be 50% or more - this ratio is calculated for the sector as a whole to determine its exposure to international competition (the import penetration ratio is the total value of sector imports, divided by the total value of UK sector sales, plus the total sales value of imports, minus the total value of sector exports)
Sectors that do not meet the international competitiveness criteria must have an EI of 10% or more.
The eligibility test is based on the average energy cost and production values for 3 consecutive years. It is only applied at sector level and only at the beginning of the agreement so as not to dis-incentivise energy efficiency.
To find out more about CCAs and whether your business is eligible to join one, please contact your relevant sector association.
CCAs have a 2-tier structure:
- Sector-level agreements between the Environment Agency (The Administrator) and the sector or trade association (known as umbrella agreements) - these set out sector targets, the sector and the Environment Agency’s obligations, and the procedures for administering the agreements.
- Individual agreements between the Environment Agency and the facility operator (known as underlying agreements) - these set out the targets the facility needs to meet, the operator and the Environment Agency’s obligations, and the procedures for administering the agreements.
Once an agreement is in place, an eligible business will gain CCL discount of 90% on electricity and 65% for other fuels.
More information is available on the Environment Agency publications: sector umbrella agreements web page.
The guidance papers take applicants through a series of logical steps, including how to set up a CCA, eligibility criteria, making sure baseline conditions are established correctly, and how to report CCAs. There are also papers dealing with changes in circumstances and errors – including essential technical data.
Reduced rate certificates
Once a facility is approved for a CCA, it can receive discount on the CCL.
Reduced rate certificates are updated monthly as necessary (the latest revision date appears on each document). HM Revenue and Customs (HMRC) is notified of any changes monthly to ensure each facility achieves the correct discount. Certificate details for facilities that are part of the CCA scheme can be from the Publications pages.
The legislation that supports CCAs is available on the Legislation.gov.uk website.
- Finance Act 2000
- Eligibility SI 2012 sets the eligibility basis under which an installation or site is to be (or continue to be) identified in a given CCA & its subsequent amendment Eligibility Facilities Regulations 2013
- Environmental Permitting Regulations 2010
- Climate Change Agreements (Administration) Regulations 2012 outlines what is required of the Environment Agency as administrator of the new CCA scheme & its subsequent amendment in 2013
The old CCA scheme: 2006 - March 2013
Useful information on the old CCA scheme can be found on the National archives version of the DECC: Climate Change Agreements web pages.
Climate Change Agreements team
Richard Fairclough House
- Email: firstname.lastname@example.org
- Telephone: 03708 506 506
Documents are available which explain the performance of CCA participants at various milestones since the initiative began in 2001 and are available: