Climate Change Agreements (CCAs) allow eligible energy-intensive businesses to receive up to an 80 percent discount from the Climate Change Levy (CCL) in return for meeting energy efficiency or carbon-saving targets.
Climate Change Agreements (CCAs) cover a wide range of industry sectors, from major energy-intensive processes such as steel, chemicals and cement, to agricultural businesses, such as intensive pig and poultry rearing.
Smaller sites that do not meet the size thresholds of the Pollution Prevention and Control (PPC) Regulations, but otherwise would qualify, are also eligible for a CCA. The exception to this is combustion plants with more than 50 MW capacity and the 3 MW limit for burning waste oil, recovered oil or fuel manufactured from or comprising waste.
Energy-intensive industries were defined initially as industries covered by Part A1 or A2, in Part 1 of Schedule 1 of the Pollution Prevention and Control (England and Wales) Regulations 2000 (as amended). This definition applies throughout the UK.
In 2006, the Government extended the qualifying criteria for sectors that could apply for a CCA, and expanded the definition of ‘energy intensity’ to include the one set out in the Energy Products Directive (which came into force on 1 January 2004). The extended criteria are as follows:
- Energy intensity (EI) must be 3 percent or more (i.e. energy costs must be 3 percent or more of the production value for the sector).
- The industry import penetration ratio must be 50 percent or more. This ratio is calculated for the sector as a whole to determine its exposure to international competition. (The import penetration ratio is the total value of sector imports, divided by the total value of UK sector sales, plus the total sales value of imports, minus the total value of sector exports.)
Sectors that do not meet the international competitiveness criteria must have an EI of 10 percent or more.
The eligibility test is based on the average energy cost and production values for three consecutive years. It is only applied at sector level and only at the beginning of the agreement so as not to disincentivise energy efficiency.
Sectors that have negotiated EI agreements include industrial gases, cold storage and glass manipulators.