Tuesday 7th of July 2020 | Posted In: Use and Manage, Energy saving

Climate Change Agreement scheme two-year extension announced

In the Spring Budget 2020, the Government announced the CCA scheme would be extended for two years. Details of the proposed changes are now starting to emerge:

  • There will be an additional two-year Target Period for 2021-22 (TP5)
  • Participants will be able to benefit from CCL relief until March 2025.
  • Previously closed to new entrants, the scheme has been briefly re-opened
  • The new Target Period 5 will have some additional features:
    • There would be new targets for it.
    • It is likely no surplus gained from the previous four Target Periods can be used.
    • Performance could be compared to that achieved in 2018

Those currently in the scheme can be automatically rolled forward into the extended scheme, though updated agreements will need to be accepted for this to happen. For those already participating in the scheme, It may mean data for new baseline period will need to be collected if it is not already held.

The re-opening of the scheme for the final Target Period means operators who had previously left, or those who had never joined, now have an opportunity to join provided we receive the application by 31 August 2020. More details can be found on our website ccl.nfuenergy.co.uk

Those who left the CCA scheme due to not meeting targets should consider rejoining as the baseline will be moved to a more relevant period which considers how the business is operating now.

Your CCL Discount is Valuable – Don’t throw it away

The value of the discount may be significant to your business and you may not have realised. We’ve calculated that the average site in the NFU CCL scheme saved 14 times more in the year April 2019 to March 2020 than at the beginning of that decade. Those not in the scheme will have seen drastic increases to CCL tax paid on energy bills.

As the CCL is now running for an additional two-year period, participants must still keep records throughout the duration of the agreement and for a period of four years following the termination of the agreement. A member who joined at the start of the CCL scheme (March 2013) and holds their agreement until March 2025 will now be expected to keep the records until March 2029.

Records include energy and production records which evidence their Base Year (2008 in most cases) and Target Period submissions. Records will usually consist of energy invoices and production records (or greenhouse area for much of horticulture). Make sure you don’t let those old records get thrown away – you could be seeing your valuable CCL discount get thrown out with them if you get audited.

Targets and new base year proposal

In 2017, the Government set a goal to improve energy efficiency in businesses and industry by at least 20% by 2030 from a 2015 baseline, then more recently to net zero by 2050. As a consequence, the Department for Business, Energy and Industrial Strategy (BEIS) are expected to set targets for the new Target Period 5 around a 1.67% p.a. saving overall sectors (compared to the current 1.17% to 1.89% p.a., depending on the sector).

The NFU CCL scheme’s three sectors (pig, horticulture and poultry) have previously had targets in energy terms. The NFU and NFU Energy are pressing for the targets to be in carbon. This would be in line with the Government’s aims as well as the NFU’s aims for net zero by 2040. It would not disadvantage those who remain using fossil fuels, but it would mean those who switch to renewables will find the targets much easier to meet.

CCA scheme after March 2025

The extension gives BEIS a little longer to put forward proposals for the future of CCAs after the current scheme ends, now March 2025. It appears BEIS view CCAs as an effective tool, so a successor scheme seems likely. They are examining how it might fit within the wider policy landscape and contribute to the commitment to net zero.

Things are at an early stage, but as soon as we have any more news about a potential phase 3 we will let you know.