Climate Change Agreement (CCA) Scheme 2020
4th May 2020
The current Climate Change Agreement (CCA) scheme in the UK has changed having implications on;
- businesses who currently hold a CCA and
- businesses who would like to complete a new CCA application.
Bradley Hill, Brownlow Utilities’ Carbon Service Manager, points out these changes and the impact/action that needs to be taken.
The current CCA Scheme
CCA’s are voluntary agreements made by UK industry and the Environment Agency to reduce energy use and carbon dioxide (CO2) emissions. A business that has a CCA will measure and report its energy use and carbon emissions against agreed targets over 4, 2-year target periods. In return, businesses receive a discount on the Climate Change Levy (CCL)- a tax added to electricity and fuel bills.
As you may be aware, we are currently in the final target period of the current Climate Change Agreement scheme. Target Period 4 runs January 2019-December 2020. Then between the period of January 2021 and March 2023 there was a period of no targeting but participants were allowed to continue to claim CCL relief whilst a new scheme was created and targets established.
What are the key scheme changes?
In the recent budget, the Chancellor outlined that there was a plan to extend the current scheme and that further details would be released upon consultation. This has now been released and I have summarised the key findings for our CCA clients.
- The current Climate Change Agreement scheme has been extended until March 2025
- A new Target Period, Target Period 5 (TP5) will be established for the period January 2021-December 2022.
- The “no target” period of 2 years has been moved between January 2023 and March 2025
- Targets for Target Period 5 will be derived from a straight line increase from the Target Period 1-4. Thus setting the hardest target to date.
- No Carbon Accumulated from Target Period 1-4 will be allowed to be used against performance at the end of Target Period 5
- The price of a tonne of Carbon for sites who fail TP5 will increase from £14 to £18 per tonne.
- There is now a small window until September 2020 for new applicants to join the scheme, with new agreements beginning exclusively in Target Period 5 (January 2021)
- New applicants will now have to use the new default Base Year of 2018 or the oldest 12 month complete data set from that point as their base year period.
I have highlighted the two most poignant points in bold above. As an energy consultant, responsible for the management of our clients agreements, I have already lobbied the relevant Sector Federations. They will dispute these changes in the formal consultations on their member’s behalf.
So how does this affect my business?
New applicants – this extension has meant that businesses can now apply for a CCA and applications needs to be completed by September 2020. We can help you obtain and manage this process. If you want to know more, please give me a call or email me a copy of your bill and a brief outline of your business processes.
Current CCA holders – now is the time to review your current agreements to ensure they have been optimised and minimise any non compliance. We will be undertaking analysis to forecast our client’s performance in TP5 ahead of the period starting. We will be working with those sites whom we will feel may struggle to meet these new targets, to see what strategies we can engage to maximise performance within the scheme and minimise any potential costs.
If you have any further questions on how this will directly impact your CCA please do not hesitate to get in touch with the Carbon team or your Account Manager. Also if you know of any businesses that may be eligible for a CCA, NOW IS THE TIME to investigate the application.