The Department for Energy Security and Net Zero (DESNZ) has published the government response to its 2023 consultation on its proposals for a new six-year climate change agreements (CCA) scheme, to follow the existing scheme from 2025.
This article reveals what the government response indicated and how the CCA new scheme differs from the existing scheme.
CCAs are voluntary agreements made between sector associations, their members and the Environment Agency as CCA administrator. They commit energy-intensive installations and facilities to improve their energy efficiency or reduce carbon dioxide emissions in return for receiving a reduced rate of CCL.
The government response indicates that the new CCA scheme will run for five years starting on 1 January 2026, rather than the consultation proposal of six years commencing on 1 January 2025. This is to allow both government and participants sufficient time to implement its requirements. It will set targets to the end of 2030 and provide climate change levy (CCL) reduced rates for those meeting their obligations until March 2033. It will assume that current participants make continued progress in 2025 in preparation for 2026.
The new CCA scheme will be a separate and new scheme, rather than an extension to the existing scheme, while building on its fundamental aspects. This will require sectors and operators to enter into new CCA agreements and to meet new targets. Existing participating facilities will not automatically be transferred to the new scheme. The government intends to take a proportionate approach to assessing the eligibility of currently participating facilities.
The new scheme will move to facility level reporting. The penalties available to the Environment Agency as CCA administrator will remain the same but the number of audits will increase significantly.
Sectors that have notified DESNZ of their intention to register a new sector or to add a new process to the new scheme will need to provide evidence so they can be assessed against the existing eligibility rules. For further information and advice, please contact the business risk and regulation team.
