Climate Change Agreements what are they?

Businesses need to have a knowledge of the energy market and climate change agreements can be set up to help reduce a business utility spend 

Climate change agreements are voluntary agreements made by UK industry and the Environment Agency to reduce energy use and carbon dioxide (CO2) emissions. In return, operators receive a discount on the Climate Change Levy (CCL), a tax added to electricity and fuel bills. The Environment Agency administers the CCA scheme on behalf of the whole of the UK.

For operators who hold a Climate Change Agreement, the Climate Change Levy will be reduced by:

• 90% on electricity bills
• 65% on other fuels

Climate change agreements are available for a wide range of industry sectors from major energy-intensive processes such as chemicals, paper and supermarkets to agricultural businesses such as intensive pig and poultry farming.

There are two types of Climate Change Agreements – umbrella agreements and underlying agreements.

The Department of Energy and Climate Change and industry sectors negotiate umbrella agreements. Together they agree the energy efficiency targets for a sector – the sector commitment. The agreement is then held between the sector association and the Environment Agency; the administrator. Umbrella agreements also list the processes that are eligible for a Climate Change Agreement.

An underlying agreement is held by a site, or group of sites, owned by an operator within a particular sector. This contains energy or carbon efficiency targets appropriate for their type of operation.