Businesses called upon to consult on £300m energy-saving Climate Change Agreement

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The Climate Change Agreements (CCA) initiative was first established in 2013 and acts as a lever to help businesses in energy-intensive sectors reduce carbon emissions and energy costs by granting them discounts to the Climate Change Levy (CCL).

The CCA was scheduled to close in March 2023, but Chancellor Rishi Sunak confirmed in his first Budget that the Government would consult on extending the scheme by an additional two years. A consultation on the extension was launched on Thursday (16 April), with businesses invited to offer their thoughts on the scheme. However, the Government is not proposing to reform the eligibility criteria for the scheme or to “substantially review existing rules and processes”.

Energy Minister Kwasi Kwarteng said: “Extending the Climate Change Agreement scheme will give businesses greater clarity and security at a time when they need it most. This extension will save businesses money while cutting emissions – a key element of our work to combat climate change in the months and years ahead.”

The Government believes that the CCA can spur decarbonisation in energy-intensive sectors as the nation pushes towards its net-zero emissions goal for 2050. Notably, 25% of UK greenhouse gas emissions come from the private sector and the CCA has already helped businesses reduce energy use by up to 2.3TWh a year – enough energy to power 140,000 homes.

More than 9,000 facilities across the UK benefit from participation in the scheme and around 700,000 tonnes of carbon emissions have been saved each year through the programme.

It works by encouraging businesses to make improvements to energy efficiency to facilities over an eight-year period. In return, businesses receive a discount worth an estimated £300m annually on CCL bills.

Government analysis conducted as part of the Clean Growth Strategy showed that around £6bn in energy costs could be saved and 22MtCO2 avoided through to 2030 through investments into cost-effective efficiency technologies.

On buildings specifically, UK businesses are wasting energy to the tune of £60m in unnecessary energy bills, according to a Green Alliance report that is calling for better commercial energy management to help reach the UK’s climate targets.

In fact, businesses that have signed up to the Climate Group’s EP100 initiative to increase energy productivity (i.e. achieving a higher economic output per unit of energy consumed) have collectively shaved £45m off their energy costs.

Matt Mace