Corporate report

Climate change agreements: biennial progress report for 2023 and 2024

Updated 18 December 2025

1. Executive summary

Climate Change Agreements (CCAs) are voluntary agreements made between industry and government. They give eligible businesses with energy-intensive processes a significant discount on the Climate Change Levy (CCL). The CCL is a tax on energy use in industry, commerce and the public sector. In return, participants sign up to energy efficiency improvement targets agreed between government and sector associations.

The Environment Agency administers the scheme for the whole of the UK on behalf of the Department for Energy Security and Net Zero (DESNZ).

This report sets out the energy efficiency improvements and emission reductions achieved by agreement holders for the sixth target period (TP6). TP6 ran from 1 January 2024 to 31 December 2024 only.

There was no target teriod between the end of 2022 and the start of 2024. This is because the period between 1 January 2023 and 31 to December 2023 was a non-reporting period. At the end of TP6 there were 3,332 target units covering 8,685 facilities captured in the scheme.

By the reporting deadline of the 1 May 2025, operators of:

• 3,239 target units submitted reports on their TP6 performance (including 18 from operators who had voluntarily terminated their agreements)
• 56 target units voluntarily terminated their agreements
• 50 target units failed to submit a report

Of the reports we received by the deadline, operators of:

• 1,473 (45.5%) target units met or exceeded their improvement targets
• 1,766 (54.5%) target units failed to meet their improvement targets

Operators who failed to meet their TP6 improvement target could choose to pay a buy-out fee of £25 for each tonne of carbon dioxide equivalent (CO2e) above their target emissions.

In summary, in TP6:

• 19.9 million tonnes of carbon dioxide equivalent (tCO2e) emissions were reported
• emissions compared to the unadjusted base year reduced by 2.36 million tCO2e (10.6%)
• emissions compared to the adjusted base year (to account for changes to throughput between the base year and TP6), reduced by 5.94 million tCO2e (23.0%)
• if all operators had met their targets exactly, emissions should have reduced by a total of 2.5 million tCO2e compared to the adjusted base year (equivalent to a reduction of 9.69%)
• there was a net over-performance against targets of 3.48 million tCO2e (equivalent to a reduction of 13.5%)
• 23 (46%) of the 50 active sectors and sub-sectors met their TP6 targets
• the TP6 base year related to 2018 which was the same as the fifth target period (TP5)

We have calculated all the figures in this report using the information submitted to us by operators.

Our report does not consider the extent to which the changes in emissions can be attributed to participation in the Climate Change Agreement (CCA) scheme or other drivers. A range of factors including commercial incentives may affect participants’ energy use and emissions.

2. Overview of the CCA scheme

2.1 Background

The CCA scheme is a voluntary scheme intended to encourage participants to improve their energy efficiency and reduce their carbon dioxide emissions. Participants willingly commit to meeting ambitious energy efficiency or carbon reduction goals. In return, they can claim the reduced rates of CCL on their electricity, gas and solid fuel bills.

The maximum percentage discounts on CCL rates for the period covered by this report and relevant to Certification Period 7 (CP7) were:

• 92% for electricity
• 89% for natural gas
• 77% for liquefied petroleum gas (LPG)
• 89% for other taxable commodities

2.2 Agreements

There are 2 types of CCA agreement:

• an umbrella agreement between a sector association and the Environment Agency
• an underlying agreement between an operator and the Environment Agency

There were 50 umbrella agreements in the scheme for TP6. Each umbrella agreement contains a sector commitment (an energy efficiency improvement or carbon reduction target) for each target period.

The sector commitments for the first target period (TP1) to TP5 were agreed between the sector associations and the former Department of Energy and Climate Change (DECC). The DECC was the predecessor of Department for Business Energy & Industrial Strategy (BEIS).

The sector commitments for TP6 (1 January 2024 to 31 December 2024) were agreed between sectors and the DESNZ in November 2023.

The ceramics and sawmills sector both contain sub-sectors for which different sector commitments were agreed for TP6. We have separated out sub-sectors with different sector commitments.

The underlying agreement identifies the operator and all the facilities they have chosen to include in their agreement. This group of facilities is collectively known as a target unit. The underlying agreements contain an energy efficiency or carbon reduction target for each target period.

2.3 Improvement targets

Both types of agreement cover five 2-year target periods running from 1 January 2013 to 31 December 2022, and a one-year target period running from 1 January 2024 to 31 December 2024. Targets for each of the target periods were set against a base year specific to each sector and target unit. The base year for TP1 to the fourth target period (TP4) was 2008, while for TP5 and TP6, the base year was 2018. Operators who did not have data for the base year were required to use 12 months of data from the next closest period.

Operators of target units who meet or exceed their targets can claim the reduced rates of CCL for the next certification period. Those operators who do not meet their target may choose to pay a fee to government to allow them to continue to claim the reduced rates of CCL. For TP6 the buy-out fee was £25 per tonne of CO2e.

For more information on the CCA scheme, see our guidance on Managing a CCA.

2.4 Biennial progress report

This report provides an overview of the energy efficiency improvements and emission reductions accomplished by operators and sectors in relation to their respective targets. This document is the report for TP6 (1 January 2024 to 31 December 2024) only. This report is published in accordance with Regulation 9 of the Climate Change Agreements (Administration) Regulations 2012. It takes account of the government response to the   consultation published in September 2014 of target unit performance data.

This report only covers the energy use that is subject to a CCA, which may not be all the energy used in facilities (for example, fuels used by those regulated by the UK Emission Trading Scheme, UK ETS, are excluded). We took the data from operators’ reports that were submitted to us by 1 May 2025 and buy-out fees that were received by 1 July 2025. Any late reports or overdue payments are excluded from this report. The data used is supplied by the participating operators who are responsible for the quality of their submissions.

This report comprises:

• a narrative report (this document) summarising the scheme, sector and target unit performance
• data for each target unit and sector published on data.gov.uk

3. Significant events affecting CCAs

3.1 Government reviews and changes to policy

Following a consultation held between November 2023 and February 2024, the government confirmed the continuation of the CCA scheme in a new 6-year phase (CCA3). The target periods will run from 1 January 2026 to 31 December 2030. CCL reduced rates will remain in place until 31 March 2033 (though reduced rates are subject to change).

As part of this transition into a new scheme, the seventh target period (TP7) has been defined as the first target period of the new scheme. This will run from 1 January 2026 to 31 December 2026. Under the new scheme, targets will be set at facility level replacing the previous approach of ‘bubbled’ agreements covering multiple facilities. This change simplifies some of the existing rules and provides an improved incentive to implement energy efficiency or decarbonisation measures at all CCA sites.

The new scheme from TP7 introduces:

• an updated eligibility criterion
• revised reporting requirements
• a new formula for calculating the buy-out fees based on CCL rate in CO2 terms

Facilities in existing CCA sectors wishing to participate in the new scheme were able to submit an application during a new entrant window with baseline data from 2022 performance. The sixth Certification Period (CP6) ran from 1 July 2023 and was extended to 30 June 2025 to reflect the inclusion of TP6. CP7 was introduced on 1 July 2025 and will run until 31 March 2027. This allows facilities in the current CCA scheme to maintain their certification status and continue receiving CCL relief throughout TP7 and into the new CCA scheme.

3.2 Reopening the scheme to new entrants for TP7

The government’s consultation on CCA extension and future scheme (2023) reopened the scheme to applicants through a new entrant window for facilities, which then closed on 30 September 2025.

3.3 Data corrections

The biennial reports for TP1 to TP6 provides a snapshot of the scheme’s performance at the time of their publication. Some data in the reports we originally received were changed following the notification of errors and following our own audits. We have not updated the data from previous biennial reports to reflect these changes.

4. Summary of TP6 results

4.1 Reporting

There were 3,332 active underlying agreements in force covering 8,685 facilities immediately after the end of TP6.

For the reporting period between 1 January and 1 May 2025:

• the operators of 56 underlying agreements notified us that they wanted to voluntarily terminate their agreements
• we received 3,239 reports (including 17 reports from operators who had voluntarily terminated their agreements)
• 49 target units (covering 58 facilities) failed to submit a report by 1 May
• 98.4% of reports were received by the reporting deadline with exception of operators who had voluntarily terminated their agreements
• 49 notices of intent to issue a financial penalty were served on operators who had not submitted a report by the reporting deadline
• 36 late reports were received after the reporting deadline
• 13 operators notified us that they wanted to voluntarily terminate their agreements or are in administration

4.2 Target unit performance

The following data is a summary of all the reports we received by 1 May 2025 and excludes the data from the 39 late reports.

The operators of 1,473 target units (covering 3,238 facilities) met or exceeded their TP6 targets with:

• an average surplus gain of 3,874 tCO2e
• a maximum surplus gain of 692,121 tCO2e
• a total surplus gain of 5.69 million tCO2e

The operators of 1,766 target units (covering 5,340 facilities) did not meet their TP6 targets with:

• an average under-performance of 1,257 tCO2e (equivalent to an average of £31,425 in buy-out fees per target unit)
• a maximum under-performance of 196,079 tCO2e (equivalent to a buy-out fee of over £4.9 million)
• a total under-performance of 2.21 million tCO2e

4.3 Use of the buy-out fee

The operators of target units that did not meet their targets had the opportunity to use the buy-out mechanism.

We served buy-out fee notices on the operators of the 1,787 agreements who did not meet their targets (this includes the buy-out fee notices we issued to the operators of the 39 target units who reported late).

For the target periods TP2 to TP4, we used any surplus operators had gained in earlier target periods to offset any under-performance against targets. A change in the rules for TP5 and TP6 meant that we could not use any surplus operators had gained in earlier target periods to offset their under-performance against any future CCA targets in TP7.

Table 1: Use of the buy-out mechanism

Target period	TP1	TP2	TP3	TP4	TP5	TP6
Number of target units in receipt of buy-out fee notice	1,627	1,321	1,394	1,343	1,840	1,787
Number paying buy-out fee by 1 July following the reporting deadline	1,420	1,216	1,245	1,218	1,590	1,502
Total value of buy-out fees received by 1 July following the reporting deadline (million pounds)	£22.1	£22.2	£28.9	£33.1	£44.9	£40.2

The cost of buy-out fees was:

• £12 per tCO2e for TP1 and TP2
• £14 per tCO2e for TP3 and TP4
• £18 per tCO2e for TP5
• £25 per tCO2e for TP6

We certified a total of 6,656 facilities as eligible to claim the reduced rates of CCL from the start of CP6, which began on 1 July 2025.

Where the operators paid their buy-out fee after 1 July 2025, we certified the facilities from the date the buy-out fee was received by DESNZ.

4.4 Overall changes in emissions and energy use

We calculate changes by comparing a target unit’s emissions and energy use in the target period against the base year. We can calculate the changes either with or without adjusting the base year figures for changes in throughput. We have provided calculations for both approaches.

4.5 Unadjusted calculation of changes

For TP6, the unadjusted calculation compares emissions reported for the 12-month reporting period (2024) against the base year (2018) without adjusting for changes in throughput. As both periods cover 12 months, no scaling is required unlike previous target periods. Table 2 shows the result of this compared to previous years.

Emissions for TP6 were 2.4 million tCO2e below what they would have been if no improvements had been made since the base year.

The energy savings between the base year and TP6 were 11,287 gigawatt hours (GWh).

Table 2: Unadjusted changes in emissions (millions tCO2e)

Target period	TP1	TP2	TP3	TP4	TP5	TP6
Base year emissions	26.0	25.2	25.5	24.7	22.9	22.2
Base year emissions × 2	52.0	50.4	51.1	49.4	45.8	not applicable
Target period emissions	45.7	45.5	45.0	42.8	42.4	19.9
Emissions reduction	6.2	4.9	6.1	6.6	3.3	2.4

The figures in table 2 are rounded to 1 decimal place for display purposes. Calculations have been performed using the full precision of the original data.

4.6 Adjusted calculation of changes accounting for throughput effects

Although the unadjusted approach is straightforward, it does not account for changes in throughput and product mix that may have occurred since the base year. Most target units have relative targets which express the energy consumed in terms of throughput. For example, this may be kilowatt hours per tonne of product. We describe this measure as the specific energy consumption (SEC).

Using the base year SEC and the target period throughput, we can calculate the amount of energy that would have been consumed in the target period if no improvements had been made. As this accounts for changes in throughput and product mix, this gives a more representative assessment of changes in emissions and energy.

Table 3 shows the adjusted base year emissions for all target units with relative targets. The difference between actual emissions and the adjusted base year is an emissions reduction of 5.9 million tCO2e (equivalent to a reduction of 23.0%).

The corresponding energy savings using the adjusted base year approach are 29,381 GWh.

If all operators had met their targets exactly emissions should have reduced by a total of 2.5 million tCO2e compared to the adjusted base year (equivalent to a reduction of 9.7%).

Table 3: Adjusted changes in emissions (million tCO2e)

Target period	TP1	TP2	TP3	TP4	TP5	TP6
Adjusted base year emissions	51.4	53.3	54.0	52.1	46.3	25.8
Target period emissions	45.7	45.5	45.0	42.8	42.4	19.9
Actual reduction in emissions	5.6	7.8	9.0	9.3	3.9	5.9
Target emissions reduction	3.6	4.6	5.9	6.4	2.3	2.5

4.7 Sector performance

Umbrella agreements specify a sector commitment (target) for each target period, relative to the base year.

We determine whether a sector meets the sector commitment by comparing the actual achievement of target units in the sector against a ‘sector improvement target’ calculated from the sector commitment.

The sector improvement target may differ to the original sector commitment because of changes in the composition of target units in the sector during TP6, such as:

• the removal of target units following termination of agreements
• the removal of facilities from multi-facility agreements
• corrections of errors in base year data
• adjustments to targets due to unexpected power supply disruptions
• adjustments to targets due to throughput reductions greater than 10% for target units with absolute targets

Of the 55 sectors in the scheme:

• 5 sectors do not currently contain any target units and have been excluded from our analysis
• the sawmills sector has 2 sub-sectors, each of which has a different target
• the silica sand sub-sector (part of the ceramics sector) has a different target to the other 4 sub-sectors in the ceramics sector

In summary, 23 (46%) sectors and sub-sectors met their targets and 27 (54%) sectors and sub-sectors failed to meet their target.

The sector targets provide a basis for setting individual targets in the underlying agreements. There are no direct consequences for sectors over- or under-performing against their targets.

We publish a summary of each sector’s performance in a data spreadsheet that accompanies this report on data.gov.uk. It includes energy consumption and CO2e data for the base year and for each of the target periods TP1 to TP6. It is important to recognise that although both the base year and TP6 cover a 12-month period, simple comparisons in their energy and emissions must be approached with caution. This is due to differences in reporting scope, throughput or methodology which may still affect the comparability of performance data. We have deliberately excluded energy consumption data for sectors with fewer than 3 distinct operators to avoid disclosure of commercially sensitive information.

4.8 Individual target unit performance

Operators of all target units in the CCA scheme on 31 December 2024 were required to report their performance against their targets in TP6 by 1 May 2025.

The target unit performance table is published in a data spreadsheet that accompanies this report and is published on data.gov.uk.

For each target unit the spreadsheet has columns showing:

• the CO2e emissions
• whether the operator met the TP6 target
• whether the operator paid a buy-out fee – ‘Y’ means that the fee was received by 1 July 2025, ‘N’ means that no fee was received by 1 July 2025 (this is either because no buy-out fee was due, it was paid after 1 July 2025 or was not paid)

A ‘U’ in any of the columns signifies that the data were unreported by 1 May 2025. We have chosen to present a snapshot of the data as it was:

• immediately after the reporting deadline (1 May 2025) for the emissions data
• immediately after the buy-out fee payment deadline (1 July 2025) for buy-out fees

4.9 Data accuracy

Operators may discover errors when they review their data and provide us with corrected data. We may also require changes for errors we discover in audits. However, we will not amend and republish this report or the accompanying spreadsheets following receipt of revised data. This report is only a ‘snapshot’ of performance taken directly after reporting and is not a live document.

5. Compliance and non-reporters

5.1 Compliance with reporting

Fifty Notices of Contravention and Intent to Impose a Financial Penalty were sent to operators for failing to submit TP6 reports to us by 1 May 2025. Of these:

• 24 submitted reports within 10 working days of the deadline
• 21 voluntarily terminated their agreements or are in administration

5.2 Enforcement

We are currently responding to non-compliances in accordance with our enforcement and sanctions policy.

We took enforcement action against 21 operators who failed to report the performance of their target unit for TP5 by the 1 May 2023 deadline. These operators were required to provide their missing target period reports and financial penalties were imposed where appropriate.

We imposed a penalty with the value of £1,668.08 for the failure to submit a TP5 performance report. Fourteen operators chose to voluntarily terminate their agreement. One agreement was terminated through administrative termination and one agreement was terminated through regulatory action.

Penalties were waived for 5 operators who submitted their performance reports within 10 working days of the 1 May deadline, provided this was their first instance of non-compliance.

We publish a list of the civil penalties for all climate change regimes, including CCAs, on data.gov.uk.