What are Climate Change Agreements?
The Climate Change Agreements (CCAs) scheme is a voluntary scheme in which participants enter into an agreement with the Government to reduce their energy use or emissions and, in return, they receive a discount on the Climate Change Levy (CCL) – a tax added to energy bills.
The framework for CCAs was established under Schedule 6 to the Finance Act 2000. The scheme is mainly aimed at energy-intensive industries like manufacturing, chemicals, and food processing and is currently administrated by the Environment Agency (EA).
So far, the scheme covered 6 target periods (TPs), with TP6 running between 1st January and 31st December 2024. Participants who achieved the agreed targets during a TP benefit from reduced rates during the certification period*.
*The certification period usually covers the following target period (e.g. those who achieved their targets in TP5 can claim reduced rates of CCL until the end of TP6).
The scheme also allows participants to pay a buy-out fee if they fail to achieve targets, in order to remain eligible for CCL discounted rates.
What’s new in the 2025 CCA Regulations?
The UK government has updated the rules for CCAs to make the scheme more effective and to support the country’s climate goals. The Climate Change Agreements (Administration and Eligible Facilities) (Amendment) Regulations 2025 makes changes to the below regulations to provide for a new phase of CCA, starting in 2026.
- The Climate Change Agreements (Administration) Regulations 2012
- The Climate Change Agreements (Eligible Facilities) Regulations 2012
Key Changes
New Target Periods
These periods are the timeframes during which scheme participants must meet specific energy-saving or carbon-reduction goals.
These periods are the timeframes during which scheme participants must meet specific energy-saving or carbon-reduction goals.
The government is giving the CCA scheme a longer life by adding 3 new target periods:
- Target Period 7: January 2026 – December 2026
- Target Period 8: January 2027 – December 2028
- Target Period 9: January 2029 – December 2030
Scheme Extension
The CCA scheme is extended until March 2033. The extension means that businesses can keep receiving CCL discounts until this date, giving them more time to plan improvements, invest in energy-efficient technologies, and benefit from lower energy costs.
Facility-Level Targets Instead of Group Targets
One of the biggest changes is how targets are set and measured. In the past, businesses with multiple sites could group them together and meet targets as a whole. This meant that if one site used more energy than expected, another site’s savings could balance it out.
Starting in 2026, that’s no longer the case. The new rules require each individual facility to meet its own energy or emissions targets. This is called facility-level targeting.
For businesses with multiple facilities, this change could mean more work upfront (e.g. tracking energy use separately for each site) but it also brings more control and transparency.
Higher Buy-Out Fee
Same as before, if a facility doesn’t meet its energy-saving or emissions target, it can still stay in the scheme by paying a buy-out fee; however, the buy-out fee for TP7 -TP9 will increase from £25 to £37 per tonne of CO₂ equivalent. The higher fee aims to encourage businesses to meet their targets rather than rely on paying to stay eligible.
More Stringent Reporting Requirements
Businesses will now need to submit more regular and detailed reports showing how they’re progressing toward their targets.
Updated Energy and Emissions Calculations
The changes to calculations include an updated formula for calculating the buy-out fee, as well as updated Primary Electricity Factor (PEF) and Carbon Emission Factors (CEF).
The way energy use and carbon emissions are calculated is being updated to reflect the UK’s cleaner electricity grid. This means businesses will be measured more accurately based on today’s energy mix, making the scheme more relevant and fairer.
Conclusion
Whether you’re already part of the scheme or considering it for the first time, the new phase of CCA can offer a fresh opportunity to cut costs, reduce emissions, and contribute to a greener future.
For businesses already in the scheme, it’s a chance to continue saving money while improving energy performance. For those thinking about joining, the extended timeline and clearer rules may be the incentive to get involved.
