Climate Change Agreements (CCA) micro-guide

What is its purpose?

The purpose of a CCA is to reduce energy usage and carbon emissions, they are closely linked to the Climate Change Levy (CCL – essentially a carbon tax) as having a CCA will reduce the cost of your CCL by 90% on electricity and 65% on other fuels.

Does it affect me?

To be in a CCA you must meet the eligibility criteria by carrying out a process that the Environment Agency (EA) consider to be energy intensive or is controlled under the environmental permitting regulations.  For example, eligible processes within sectors and industries range from aluminium to chemicals, packaging, paper, cold storage and plastics.  To help determine if your process is eligible you can take a look at Appendix A in the EAs Climate Change Agreements Operation Manual.

You will also need to apply to your sector association to establish your eligibility and to set-up a CCA.

You can also contact the EA who are administrators of the scheme: cca-help@environment-agency.gov.uk.

By being part of a CCA, you will be committing to challenging targets for energy reduction.

What do you need to do to comply?

By being part of a CCA, you will be committing to challenging targets for energy reduction, the target date is 2020 but there are interim milestones set at 2014, 2016 and 2018 to track progress. Essentially, you need to be working on reducing your energy usage and carbon emissions and meeting the targets and milestones.  These targets are agreed by your sector association and the government.

What are the consequences for not complying?

There are financial penalties for failing to meet the targets. Operators that do not meet their targets can continue to receive the CCL discount if they pay a ‘buy-out’ fee. This is set in legislation at £12 per tonne of CO2 equivalent (CO2e) by which the target has been missed.

Operators that miss a target and do not pay the buy-out fee will be decertified from the scheme, making them ineligible for the CCL discount.

They can re-enter the scheme if they pay any missed buy-out fees and any other outstanding penalties. Where an operator overachieves against their target, there is a mechanism to allow them to ‘bank’ surplus tonnes of (CO2e).  This surplus can then be used in future target periods to offset underachievement.

What can you do to minimise the impact?

If you’re in a CCA the best thing you can do is work to achieve the targets. ISO50001 is great way to ensure continuous improvement and to make sure the whole business is actively trying to reduce energy consumption.

As the targets are ambitious for CCAs you should be ambitious with your energy strategy too. Look at the more significant changes you can make such as onsite power generation, processes and renewable sources alongside the amount of energy you consume.

Something else you should be aware of is that the CCA is likely to be scrapped after this phase which ends in 2023. But be warned this does not mean that legislative pressures to reduce energy usage are going to get softer – the withdrawal of CCAs is to minimise the complexity of carbon and legislation only.

How can EEF help?

For help and guidance on carbon and energy legislation, call 0808 168 5874.

 See the rest of our microguides and other advice on carbon and energy compliance issues.

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