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Budget announces two-year CCA extension

Published March 23, 2023

Budget announces two-year CCA extension

The current phase of Climate Change Agreements (CCAs) will be extended for two years to March 2027, the Chancellor announced as part of his Spring Budget last week.

Existing participants that meet agreed energy efficiency targets will continue to pay reduced rates of Climate Change Levy in 2025-26 and 2026-27. The extension will also be open to new participants in currently eligible sectors. 

The current scheme targets ended on 31 December 2022 with reduced rates of the CCL available until 31 March 2025 for those who meet targets and other obligations under the scheme. Under the extension, targets will be in place from 1 January 2024 to 31 December 2024. Performance against those targets allow reduced CCL rates to continue to be available for eligible businesses for a further two years until 31 March 2027.

Climate Change Agreements require energy intensive businesses to meet energy reduction targets. If they do so, they qualify for a discount on the amount they pay to the Climate Change Levy through their energy invoices. CCAs were introduced to prompt more energy intensive companies to introduce energy efficiency measures.

“This is welcome news for those companies which already have CCAs,” said Alfa Energy’s corporate affairs officer, Jeremy Nicholson. “The scheme has so far done a good job of shielding energy intensive industries from threats to their competitiveness while stimulating the uptake of energy efficiency. Current beneficiaries will be pleased that these benefits are to continue.”

The Department for Energy Security and Net Zero will consult on details of the extension and proposals for any potential future scheme. The consultation process will continue until 10 May.

The consultation does not include any changes to the eligibility criteria for the extension period.  However, DESNZ is proposing to increase the minimum financial penalty from £250 to £500 for failing to provide information or providing inaccurate information.

The consultation also proposes to introduce a change to the scheme extension whereby reports must be made to the scheme administrator of action taken to improve energy efficiency and decarbonisation. This must be done alongside TP6 reporting by 1 May 2025. Some participants will also be collecting and reporting this information to comply with Streamlined Energy and Carbon Reporting (SECR) requirements.