Climate Change Agreements (CCA’s) were introduced by the UK government in April 2001 as an incentive for businesses to reduce their energy bills and as a result, their carbon emissions. They are voluntary agreements containing targets for eligible industry sectors. This was introduced after the government implemented an energy tax (levy) which appeared directly on all business’s energy bills known as Climate Change Levy (CCL). CCL was originally intended to be tax neutral with a corollary reduction in National Insurance contributions.

Making the Climate Change Levy Fairer

A number of industries found CCL to be unfair where the number of their employees were relatively low in relation to the amount of energy consumed. These industries were typically ones where large amounts of energy are fundamental to their operation. In many cases these disadvantaged, energy intensive industries banded together and formed trade associations which sought to protect their individual industry sector’s interests. Their main focus is on standardisation and cooperation between like-minded companies in the chosen sector. In the UK alone there are thought to be more than 1,600 trade associations in operation with over 50 of them applicable for CCL discounts through CCA’s where registered members are consuming maximum energy. These cover a wide range of industry sectors, from major energy-intensive processes such as steel, chemicals and cement, to agricultural businesses, such as intensive pig- and poultry-rearing.

There are 54 umbrella CCA’s with trade associations representing energy-intensive business sectors within the UK. In these agreements, the sector agrees to meet a challenging energy efficiency or carbon-saving target and in return receive a 65% discount on CCL. These umbrella CCA’s are available online through the Department of Energy & Climate Change (DECC).

Alternatively, individual CCA’s between the DECC and the facility operator, known as underlying agreements, can also be agreed. These set out the targets the facility must meet, the operator and DECC’s obligations, as well as the procedures for administering the agreements. Similar to the umbrella CCA’s, these underlying agreements also receive a 65% discount on CCL.

CCL Errors are Common

CCL is applied by suppliers to your company’s energy bill as an itemised levy similar to VAT. As a result of complex government legislation, errors in the amount of levy charged can be made during this process. These errors can include CCA’s not being applied, registered charitable exemptions, and simple human/technical error. Unfortunately, based off of our experience with our clients, in today’s energy market these issues regarding CCL are not uncommon problems.

NAMB Case Study

An example of CCL discounts being applied through a CCA that recently came to our attention was when dealing with a client who was a registered member of The National Association of Master Bakers (NAMB). NAMB was founded in 1887 and has since developed into a full scale trade association operating on behalf of and for the best interests of master bakers within the UK. A benefit of this trade association as mentioned previously is that its members can take advantage of a CCA. To enable this to be possible, a variety of regulatory, pre-determined targets must be met by companies in order to qualify for the CCA’s and these are industry specific, obtainable through the relevant trade association.

Businesses which are applicable for CCA’s must first apply to the Department for Environment, Food and Rural Affairs (DEFRA) through their designated trade association. However, as a full service broker, Torse is knowledgeable about the procedures and are able to assist and support these processes. In this instance of the National Association of Master Bakers, business premises are required to complete the following three measures in order to qualify for the CCL reduction.

• Commit to energy reduction targets on a site by site basis; typically measured over a three year cycle;
  • Year 1 – lower by 1%
  • Year 2 – lower a further 1%
  • Year 3 – lower 6%

• Submit quarterly monitoring figures to NAMB; this allows for monitoring overall performance of your sites and therefore, allows you to better manage and judge your targets.
• Maintain an evidence pack ready for audit by DEFRA. The evidence pack should consist of:
  • All application paperwork
  • Any updates to paperwork
  • Quarterly monitoring form returns
  • Energy saving plans
  • Energy reports
  • Procedures of how you monitor energy usage
  • Energy efficiency measures implements, with costs and dates of implementation
  • Any other accompanying paperwork

Due to the strenuous and time consuming processes, Torse Limited is available for support and assistance throughout the CCA process and to ensure our clients are charged on the appropriate rate of CCL after the CCA’s have been applied.Conclusion

In conclusion, CCL is now an integral part of your energy usage and bills. Therefore, any discounts or reductions that can be applied to this and your energy usage are beneficial for all parties involved. Torse Limited can assist our clients and potential clients in billing validation and ensuring CCL is charged on the correct rate. If you are a member of a trade association or interested in discounted CCL, please give us a call on 0115 853 2120.

Citation

Carbon Reduction Management (unknown). Climate Change Agreements. http://www.carbonreductionmanagement.co.uk/. Retrieved on 10/05/13 from http://www.carbonreductionmanagement.co.uk/climatechangeagreements.htm

Environment Agency (2013). Climate Change Agreements Scheme. http://www.environment-agency.gov.uk. Retrieved on 18/06/13 from http://www.environment-agency.gov.uk/business/topics/pollution/136236.aspx

Gov.uk (Oct. 12, 2012). Climate Change Agreements (CCAs). GOV.UK Inside Government.Retrieved June 4, 2013, from https://www.gov.uk/government/policies/reducing-demand-for-energy-from-industry-businesses-and-the-public-sector–2/supporting-pages/climate-change-agreements-ccas.

National Association of Master Bakers (2000). Member Benefits. http://www.masterbakers.co.uk/. Retrieved on 10/05/13 from http://www.masterbakers.co.uk/page16.html