PROSPER MAGAZINE: DIGITAL EDITION
CONTROL ENERGY COSTS
Climate Change Agreements have been around since April 2001 and the present scheme since 2013. The scheme was closed but it has recently been reopened for applications with a closing date of 30th September 2020.
What is a CCA?
It is a voluntary agreement to reduce energy use and set specific energy efficiency measures in return for receiving a discount on the Climate Change Levy (CCL) component of your energy bill. The scheme is administered by the Environment Agency.
What is the Climate Change Levy?
Climate Change Levy (CCL) is a tax on energy supplied to non-domestic consumers. It is charged against each unit of energy used. It has been around since April 2001 and over that time the rates have slowly increased.
The Government’s view is that by directly taxing usage through CCL, a business will be incentivised and encouraged to consider energy efficiency measures which will ultimately reduce carbon emissions.
The rate of CCL applied to business is 0.811 per kWh for electricity and 0.406 p per kWh for gas.
The total discount available with a Climate Change Agreement is a 92% reduction for electricity and 81% reduction for gas. This can mean significant discounts can be achieved for those in energy-intensive industries.
The scheme was closed to new entrants from October 2018. However, since 1st April 2020, the government has allowed new participants to join although the period of opportunity is short. This extension will be closed on 30th September 2020 so it is likely they will stop receiving new applications from July to allow time to process the claims.
Not all businesses are eligible and only those deemed energy-intensive can receive the discount. There are a total of 53 energy sectors covered by the scheme, which range from steel to agriculture.
Each industry sector has its own set of targets and these vary depending on what was agreed with the Department for Business, Energy and Industrial Strategy or BEIS.
The food and drink sector, for example, has an improvement target of 18.0% reduction against an agreed base year, whereas aluminium has just a 2.8% reduction target.
In return for the CCL relief, a site (target unit) must meet energy efficiency targets set for the relevant sector. It is estimated that CCAs have helped businesses reduce their energy consumption by up to 2.3 terawatt-hours per year.
What happens if targets are not achieved?
The reporting period is every 2 years.
If, as a CCA holder you do not meet the targets for your sector, then you are obliged to purchase the shortfall kWh as carbon tonnage.
What happens if you overachieve the set target?
If your emissions are lower than your target, then this can be banked and used for future reporting periods where you might not have initially been able to meet the goal.
A reduction in energy use
One of the key takeaways from having a Climate change Agreement is that it must go hand in hand with a reduction in energy use. This can be achieved in several ways:
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Renewable on-site generation in the form of installation of solar panels
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Having an electric fleet of vehicles
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Energy-efficient equipment such as switching to LED lightbulbs
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Improvements to efficiency for buildings
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Behavioural changes implemented from the top down
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Data used to highlight efficiencies and problematic sites and areas for improvement
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Green powered data centres
The benefits for customers and consumers
As more and more consumers are being selective about the products they use and the environmental impact of what they purchase, you will be able to highlight the work you do as a company to reduce your impact on the environment if you have a climate change agreement in place.
Corporate social responsibility and the environment
Adding value to a business does not have to just be about profits. Corporate social responsibility and ensuring that businesses are run ethically with values that resonate with everyone, which includes employees, suppliers, consumers, and any part of the supply chain, will also add great value.
What next?
The Government has said you have until 30th September 2020 to complete your application, and, if you are successful, the relief will be available from 1st January 2021.
At Control Energy Costs, we are hopeful that the consultation will mean that the scheme will be extended. If you have any questions about CCAs or would like to know if you could benefit from a CCA, then get in touch with Liam Conway liam.conway@cec.uk.com or 07501 221728
