Manufacturers have until 31 March to opt into energy-bill-cutting scheme

Firms in energy-intensive sectors can reduce their energy bills by agreeing to voluntary targets through the government’s temporarily re-opened Climate Change Agreements (CCA) scheme.

The CCA scheme is a national initiative run by the Environment Agency in partnership with UK industry associations. Through the scheme, eligible manufacturers opt into sector-based ‘energy intensity’ targets to reduce their energy consumption and associated carbon emissions. In return, participants receive a discount on their energy bills.

The scheme had been closed to new entrants but the government has now opened a time-limited window for entries that runs until 31 March 2022.

In 2019-20, nearly 9,000 facilities across the country took part in a CCA, reducing their energy use by a combined 13.3 per cent. Those who meet their targets (or buy out any shortfall) are exempt from paying a portion of the Climate Change Levy (CCL) - a fixed charge on non-domestic electricity and fuel use that can be found on your energy bill.

From April 2022, the CCL rate is 0.775p/kWh for electricity and 0.568p/kWh for gas. CCA participants can be exempt from up to 92 per cent and 86 per cent of these costs respectively.

CCAs are open to manufacturers with an eligible energy-intensive process in a wide range of sectors. Examples include:

• Food and drink
• Textiles
• Chemicals
• Metals
• Ceramics
• Glass

Participants need to monitor and track the energy intensity of their eligible process, identify and implement ways to reduce energy use, and report their progress on a bi-annual basis.

Commenting on the temporary window for new entrants, Geraldine Bolton, CEO of the Confederation of British Metalforming (CBM), which administers CCAs for its members, said:

“Energy costs are at the top of everyone’s agenda at the moment, but outside of fixed price contracts there are few avenues for companies to turn. The Climate Change Agreement Scheme being reopened is an unexpected bonus, yet not many management teams know about it or understand what to do. After this window of entry is closed, there will be no more opportunities until March 2025.”

Interested businesses will have to move fast if they are to prepare the relevant information and opt in before 31 March. To help manufacturers understand the process, Make UK has published a short explainer video here. Businesses are also encouraged to speak to their relevant industry association for more information.