5th August 2020 | Posted by: Daniel Birkett | Industry News

The government has confirmed that the Climate Change Agreement will be extended to 2025 following a consultation.

The Climate Change Agreement (CCA) provides tax breaks to businesses which actively reduce their energy consumption and the government has confirmed it will extend the scheme until March 2025 following a consultation.

The response showed that the scheme was popular amongst UK businesses and was effective in encouraging companies to reduce their energy usage.

As such, the current scheme has been extended for another two years and the government will now look at ways to implement longer-term CCA reforms.

The latest consultation concluded that a two-year extension to the CCA scheme would deliver around £300m of cost savings to qualifying companies, while also reducing carbon emissions by 700,000 tonnes a year.

Under the existing scheme, businesses are set energy saving targets and receive a discount on the Climate Change Levy (CCL) in their energy bill once they are met.

CCA was initially scheduled to end in March 2023 but plans to set new targets for qualifying companies from January 2021 has allowed for the extension. Prior to the consultation, business have been unable to join the scheme since October 2018.

Energy Minister Kwasi Kwarteng, said: "New entrants will be allowed to apply to join existing sector agreements, with the Environment Agency expected to certify eligible new entrant facilities from January 2021," the new documents confirm. "The deadline for applications is extended to 30 November 2020."

Ministers also revealed that a timeline for the scheme’s replacement beyond 2025 will be revealed shortly.

Despite general positivity surrounding Climate Change Agreements, some technology providers have criticised the current process as the list of eligible technologies is not been updated quickly enough – as a result, some of the energy saving systems deployed by participating companies are outdated.

A flaw which is likely to be revised in any future schemes.

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