‘Extending the Climate Change Agreement scheme will give businesses greater clarity and security at a time when they need it most’
Whitehall may be dominated by the response to the coronavirus crisis, but that has not stopped the government from forging ahead with plans to better incentivise firms to invest in energy-saving equipment.
The Department for Business, Energy, and Industrial Strategy (BEIS) yesterday formally kicked off a consultation on proposals to extend the Climate Change Agreement (CCA) scheme that were first announced in last month’s Budget.
The plans were one of a raft of green policy moves unveiled in Chancellor Rishi Sunak’s first budget, which were quickly overshadowed by the escalating pandemic.
Publishing the consultation yesterday, the government said that extending the CCA scheme through to 2025 would deliver around £300m of cost savings for qualifying firms, while helping to build on the 700,000 tonnes of CO2 emissions saved each year through the programme.
The CCA scheme sets targets for businesses to reduce their energy use in return for a discounts on the Climate Change Levy on their energy bills. As such, it is designed to provide a further financial incentive for companies invest in energy saving equipment that can help to curb energy use and carbon emissions.
The scheme had been scheduled to close in March 2023, but the consultation proposes putting in place new targets for qualifying companies from January 2021 allowing the scheme to be extended until March 2025.
The consultation, which is now set to run until June 11th, will also be seeking views from industry on a potential future CCA Scheme to come into effect beyond March 2025.
Energy Minister Kwasi Kwarteng said the extension would “give businesses greater clarity and security at a time when they need it most”.
“This extension will save businesses money while cutting emissions – a key element of our work to combat climate change in the months and years ahead,” he added.
The proposals would also allow for the expansion of the scheme by allowing new businesses to apply from next year to join the thousands of large energy users that already have CCAs in place. Under the current rules, businesses have not been able to join the scheme since October 2018.
The government said the scheme had been hugely successful, helping to reduce commercial energy use by up to 2.3 terawatt hours a year – enough energy to power 140,000 homes – since its launch in 2013.
“CCAs successfully focus attention onto energy efficiency at production sites,” said Andrew Large, Director General of the Confederation of Paper Industries. “For papermaking, these agreements have helped reduce the energy to make each tonne of paper by a third since the programme started.
“We’re grateful to Ministers for listening to feedback and extending the CCA end date and discussing a successor scheme. In the current crisis, this removes one element of uncertainly and helps companies plan for the future with confidence in the knowledge that the Government is committed to supporting UK industry.”
His comments were echoed by Phillip Law, Director General of the British Plastics Federation. “The British Plastics Federation (BPF) welcomes the two-year extension of the Climate Change Agreement (CCA) scheme,” he said. “As an organisation that manages the CCA for the plastics industry, we know this scheme is highly valued and has helped to significantly reduce energy use. Reopening the scheme to new entrants is vitally important to UK businesses as it will help drive improvements to energy efficiency as well as reduce costs.”
Some observers will also regard the consultation as an opportunity to enhance the effectiveness of the scheme. While broadly welcoming the tax breaks on offer, some campaigners have in the past argued that the eneryg-saving targets assigned to companies through the scheme are not ambitious enough and that the list of qualifying energy-saving technologies is not updated frequently enough to incentivise the deployment of the latest clean technologies.
The move comes as The Spectator reported yesterday that Number 10 is exploring how to combine its three top long term priorities – Brexit, ‘levelling up’ the country’s regions, and delivering net zero emissions – in a post-coronavirus recovery plan.
“We’re emphatic that we’re not interested in the status quo ante,” one cabinet minister told the magazine.Source: Business Green