What is CCA?
Climate change agreements (CCAs) are voluntary agreements that industries can enter with the Environment Agency in the UK, they are designed for particularly energy intensive sectors. Their ultimate aim is to reduce energy use and emissions of carbon dioxide to mitigate the effects of human activity on the environment and their contribution to climate change. The agreements are negotiated by sector bodies such as trade organisations.
In a nutshell, in exchange for a fee, a commitment to reduce energy use and to use more renewable energy sources, CCAs offer a reduction in the rate of tax paid on energy, the Climate Change Levy (or CCL).
In 2013, the TSA has been negotiating a Climate Change Agreement with the Environment Agency on behalf of the commercial laundry sector, and the result is the current CCA scheme, which, in exchange for a fee, gives a rebate on the CCL of up to 95% on electricity used and up to 65% on other fuels. From the 1 April 2019, the discount will increase to 93% for electricity and 78% for other fuels. Everyone in the industry can apply for CCA through the TSA, but our members receive 50% off the cost of the agreement.
CCA discounts provide great value to our Members, and even if the current scheme is no longer accepting applications, it’s set to run until 2023. At the moment there is no replacement scheme lined-up to take its place, and that’s why we have already begun to working with the Environment Agency, through our consultants, on what would replace the CCA past this date.
These benefits, however, come with commitments. Members taking up a CCA must agree to an overall energy reduction target of 25% by 2020 through energy efficiency, with yearly milestones. To continue to benefit from the tax rebate, CCA members are required to report on their progress, but if interim targets are missed, there is an option to “buy” CO2 allowances to make up for it and remain in the scheme.
Our industry has done brilliantly so far, and by the end of the first two-year target period, had reduced its energy consumption by 19% largely exceeding the Government target of 12%. We are also projected to continue to meet our next target, having achieved a 24.12% reduction in energy use which largely exceeds the 20.83% target. The next and last target period requires industry to match at least a 25% reduction.
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