Sustainability

Understanding the New Climate Change Agreement (CCA) Scheme

The Climate Change Agreement (CCA) scheme is a government-backed initiative designed to help businesses in energy-intensive industries reduce carbon emissions and energy consumption while benefiting from significant financial savings.

Participating businesses agree to meet energy efficiency targets in exchange for a 90% reduction on CCL for electricity, significantly lowering the Climate Change Levy (CCL), a tax on non-domestic energy use. Following a recent consultation, the government has introduced a new CCA scheme to replace the existing scheme, with the existing scheme’s last target period ending 31st December 2024. 

For businesses already in a CCA it is important that they understand the changes to the scheme in order to stay compliant. For eligible businesses not currently in the scheme, this represents an opportunity to make progress on sustainability goals, cut carbon, lower costs, and improve bottom-line profitability.

Key Changes to the CCA Scheme

Target and Certification Periods

The new scheme introduces updated target and certification periods with no gaps between cycles. This ensures smoother transitions and extended benefits for participants.

Target Periods:

  • Target Period 1: 1st January 2026 – 31st December 2026

  • Target Period 2: 1st January 2027 – 31st December 2028

  • Target Period 3: 1st January 2029 – 31st December 2030

Certification Periods:

  • Certification Period 1: 1st July 2027 – 30th June 2029

  • Certification Period 2: 1st July 2029 – 30th June 2031

  • Certification Period 3: 1st July 2031 – 31st March 2033

Reporting Deadlines: All performance data must be submitted by 1st May following the end of each target period.

Eligibility and Entry

Existing participants: Existing participants in the CCA scheme will not be automatically transferred to the new scheme. Instead, they will need to confirm their eligibility to participate in the new scheme. This involves confirming that they continue to meet the eligibility criteria (e.g., eligibility under the appropriate sector process definitions). A proportion of participants will then be audited during the scheme to ensure compliance.

New entrants: Companies in currently eligible sectors can join the scheme at any point between 1st January and 31st August each year. Note: For 2025 applications, the window will only run from the 1st of May to the 31st of August. 

This means that businesses can invest the time preparing an application knowing when each window will be open; previously, this was unknown in advance, and new application windows tended to be short with very little notice. 

Successful applicants will receive relief without having to complete a target period, which means that businesses will get quicker access to CCL relief without any minimum participation period.

The updated scheme may also expand to include additional sectors, allowing more businesses to benefit and improve their sustainability performance. New sector applications start in 2027 pending eligibility verification.

Other Notable Updates

Baseline Year: Targets will now use 2022 as the baseline for energy and emissions data.

Target Setting: Sector-specific targets will be informed by data from representative samples.

Self-Generated Electricity Updates Include:

Multiplication factor: 1.0

Carbon emissions factor: 0 tCO2e/kWh

Facility-Level Reporting: Businesses must report energy and emissions data at the facility level. The previous option to combine multiple facilities (“bubbling”) has been removed.

Emissions Trading Scheme (ETS) Data: Although data from the ETS will be collected for analysis, it will not contribute to CCA targets.

Annual Reporting: Light-touch reporting is required at the end of year one within each two-year target period.

Penalties and Audits: Penalties remain consistent with the current scheme, but additional audits will be introduced. A minimum penalty of £500 will apply for non-compliance.

Energy Management Systems (EMS): While adopting ISO 50001 or similar EMS standards is not mandatory, it is highly recommended as best practice.

How Will This Impact Your Business?

Whether you’re an existing participant or new to the scheme, understanding these changes is critical. The updated CCA scheme offers opportunities for significant energy cost savings, but businesses need to act early to secure their place.

Key dates to remember:

  • The application process opens in May 2025.

  • The first new target period begins 1st January 2026.

  • CCL relief will also start on 1st January 2026.

As more companies seek to join the scheme, early preparation is essential to ensure eligibility and compliance. By participating, businesses can:

  • Achieve carbon reduction and energy efficiency goals.

  • Reduce operational costs through CCL savings.

  • Align with government sustainability initiatives and corporate ESG objectives.

How We Can Help

Navigating the new CCA scheme can be complex, partnering with experts ensures you maximise the benefits of the scheme while staying ahead of regulatory changes. We provide comprehensive support to help businesses:

  • Confirm eligibility and manage the application process.

  • Develop energy efficiency strategies and targets.

  • Monitor performance and ensure compliance with CCA rules.

  • Optimise energy usage to achieve cost savings and sustainability goals.

Get the right support for your CCA application.

Explore our compliance and exemption management services to see how we can support your CCA application and ongoing management. Alternatively, complete our quick contact form, and one of our experts will be in touch to discuss your CCA application.

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  • Author: Andrew Bardsley, Head of Energy Management

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