Market Update
October 31, 2024
GLEG UK Energy Market Update…
November 4, 2024The UK government has published its response to the recent consultation on the Climate Change Agreement (CCA) scheme. In this post, we’ve outlined the key takeaways from the consultation and explained how these changes are designed to encourage ongoing energy and carbon savings across industries while supporting competitiveness and advancing the UK’s net-zero objectives.
Key Highlights:
Consultation Summary: Following a consultation period from November 2023 to February 2024, the government has confirmed a six-year extension for the CCA scheme. Participants who meet energy efficiency targets will enjoy reduced Climate Change Levy (CCL) rates through March 2033.
Financial Impact: The updated scheme is expected to provide £310 million in annual CCL relief between 2027 and 2029, with a total relief value of £1.9 billion over six years.
Eligibility and Participation Adjustments: Current CCA participants must re-confirm their eligibility, as there will be no automatic transfer to the new scheme. New sectors and businesses may apply under revised criteria focused on energy intensity and import penetration. Newly eligible sectors can join starting in 2027, while applications from businesses in existing sectors will be accepted between May and August 2025.
Reporting and Streamlined Processes: The scheme now mandates facility-level reporting and introduces a unified target type, which simplifies compliance and reduces administrative complexity, particularly for SMEs. The new target structure replaces many of the previous rules tied to absolute and relative targets, making the reporting and evaluation process more straightforward.
Targets and Certification: The base year has been updated from 2018 to 2022. The first target period (TP1) will run from January 1, 2026, to December 31, 2027, with subsequent biennial target periods continuing until 2030. To maintain CCL relief, participants must meet established energy efficiency targets.
Sector-Specific Insights:
- Retail and Supermarkets: Facility-level reporting is expected to significantly impact sectors like retail, where previously multiple facilities were grouped under unified targets.
- Energy-Intensive Industries: High-energy sectors such as cement, steel, chemicals, and paper will remain focal points within the scheme, with sector-specific targets reflecting their unique energy requirements.
- Food and Beverage Production: This industry, where energy is a critical component of operations, will continue to qualify, with specific targets established through negotiation.
These updates represent a meaningful shift toward simplifying scheme management, enhancing transparency via facility-level reporting, and extending the timeline to support a smoother transition for participants.