Buried deep within the 2023 Spring Budget was the positive news that the Climate Change Agreement Scheme will be extended for a further two years until March 2027. Whilst this had been anticipated, confirmation will be a welcome relief for energy intensive companies at a time of what seems like never ending price increases.

The key points regarding the announcement to extend the scheme are as follows (these may be subject to change following a consultation period):

• The scheme will re-open to new entrants and the application window will open on 1 May 2023 and close on 30 September 2023. Successful applications will be eligible to claim the reduced rates of CCL from 1 January 2024
• Sector targets for the new Target Period 6 will continue to use 2018 as the base year
• Target Period 6 would only require data to be reported from 1st January 2024 to 31st December 2024. 2023 will not be covered by a target, but data is likely to be requested for this period, so data should still be recorded
• The current eligibility criteria will remain in place
• Carbon buy-out price is proposed to increase to £25/tonne
• Final sector targets will be agreed before the end of October 2023

Climate Change Agreements (CCAs) are voluntary agreements made between UK trade associations and the Environment Agency to reduce energy use and Carbon Dioxide (CO2) emissions. In return, companies receive a discount on the Climate Change Levy (CCL), which is a tax added to electricity and gas invoices.

A company that has a CCA must measure and report its energy use and carbon emissions against agreed targets over 2-year target periods. If the company meets its targets at the end of each reporting period, the facilities continue to be eligible for a CCL discount. If the company does not meet its target at the end of the period, the company may be required to pay a buy-out fee based on a £/CO2 rate to make good on its underperformance.

CCL charges from April 2023 are 0.775p/kWh for electricity and 0.672p/kWh for gas. Should a company hold a CCA this charge is reduced by 92% for electricity and 88% for gas, equating to a significant annual saving for participants.

Should you require any help or assistance in the process of applying for and/or maintaining your CCA, please contact our energy experts at enquiries@adaltaenergy.co.uk