Following the closure of the government’s consultation on reforms and an extension to the CCA scheme on Thursday, EIC explores the success of the scheme so far and the opportunity that this extension presents to business leaders.
Laying a foundation
During the Spring Budget announcement, Chancellor Sunak made it clear that while the economy would be strained during and after lockdown, its recovery could not come at the expense of UK climate goals.
Little over a month after the budget announcement, the Department for Business, Energy and Industrial Strategy (BEIS) proposed an extension to the Climate Change Agreements (CCA) scheme.
No doubt, this move was designed to engage with businesses that already fit the criteria of the scheme but were unable to join it previously and in doing so allow them to benefit from the reduced CCL cost and the environment to benefit from reduced carbon emissions.
2017 saw the Government aim its sights at a 20% improvement in commercial and industrial energy efficiency by 2030, this goal has informed the consultation with that target being upheld in regards to the extension.
The popularity and effectiveness of the scheme are undeniable, with recent analyses demonstrating that 80-100% of businesses were participating in most eligible sectors.
A consensus of this magnitude inspires hope for the UK’s climate goals, given that, of the UK’s total greenhouse gas emissions, 25% are business driven. An evaluation for the 2017 Clean Growth Strategy also showed that up to 22m tonnes of CO2 could be saved through investments in energy efficiency technology.
An open forum
The BEIS has made clear that facilities that do meet the current criteria would now be able to join the scheme for the first time since its initial closure in October 2018.
The Target Period being proposed, in addition to remaining in line with periods 1-4 of the scheme (running from the 1st January 2021 until 31st December 2022), will be supported by a variation of the certification period. Initially planned to end in March 2023, it would be pushed back to June of the same year to allow participants to gain certification for CCL discounts between April and June 2023. The added certification period, for which facilities will only be certified having met obligations in Target Period 5, will begin on 1 July 2023 and end on 31 March 2025.
The CCA’s closing in 2018 had shut out new entrants to the scheme; however, businesses fitting the eligibility now have an opportunity to recoup up to 92% on electricity and 83% on gas CCL charges.
Applications to the CCA can be long-winded and complex, however the return on an initial investment of time is huge, especially considering that an average energy intensive business the added certification period, for which facilities will only be certified having met obligations in Target Period 5, will begin on 1 July 2023 and end on 31 March 2025.
Based on these figures, the opportunity presented by Sunak and the BEIS has the potential to dramatically change the landscape of the UK energy industry post COVID-19. Alongside legislation like ESOS, MEES and SECR, the CCA calls for expertise rather than direct action. EIC oversees the entire CCA application process and subsequent management of the service following approval of the application. We will be able to show the fiscal savings based on individual business’s energy consumption and ROI against our typical fees.
Moreover, EIC offers a comprehensive range of compliance services as well as ancillary strategies that can help improve your carbon profile while reducing utility costs.