Business Energy Glossary
What is a Climate Change Agreement (CCA)?
A Climate Change Agreement, almost always shortened to CCA, is a voluntary agreement between a UK industry sector and the Environment Agency under which the sector commits to specific energy efficiency or carbon reduction targets in exchange for a substantial discount on the Climate Change Levy. Sites covered by a CCA pay only a fraction of the headline CCL rate. The current discounts are 92 per cent on electricity CCL and 89 per cent on gas CCL for the 2024-25 period. CCAs cover around 50 UK industry sectors and have been in place since 2001.
CCAs are one of the most significant cost reduction levers available to energy-intensive UK businesses. Sites in qualifying sectors that meet the efficiency targets save substantially on CCL, which can be material at industrial scale. Understanding whether a business qualifies and how to access the scheme matters for any energy-intensive operation.
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How a CCA works
A CCA is administered by a trade association (the “Sector Association”) on behalf of its member sites. The Sector Association negotiates the energy efficiency targets with the Environment Agency, monitors member sites compliance, and reports results. Member sites that meet the agreed targets retain the CCL discount; sites that fail the targets pay buy-out fees to remain in the scheme.
The scheme operates on four-year target periods, with annual reporting and biennial verification. The current scheme runs from 2014 to 2030, with extensions and modifications introduced over time. Government has indicated intention to introduce a successor scheme from 2026.
Qualifying sectors
CCAs cover around 50 UK industry sectors, primarily those classified as energy intensive under EU energy efficiency rules. Examples:
- Ceramics, glass, and building materials.
- Chemicals and pharmaceuticals.
- Food and drink production.
- Paper and pulp.
- Steel and other metals.
- Cement and lime.
- Plastics and rubber processing.
- Textiles and leather.
- Data centres (added in 2014).
- Horticulture (specific greenhouse operations).
The full list of qualifying sectors and associated Sector Associations is published by the Environment Agency. A business not in a qualifying sector cannot join a CCA regardless of its energy consumption profile.
The CCL discount
The discount rates have changed over the scheme history. The current rates (April 2024 to March 2025):
| Fuel | Standard CCL rate | CCA discount | Effective CCL rate |
|---|---|---|---|
| Electricity | 0.775 p/kWh | 92% | 0.062 p/kWh |
| Gas | 0.775 p/kWh | 89% | 0.085 p/kWh |
For an energy-intensive site consuming 10 GWh of electricity and 50 GWh of gas per year, the CCA discount saves around £105,000 per year against the standard CCL rate.
Energy efficiency targets
Each Sector Association negotiates targets specific to its sector. The targets typically take the form of:
- Specific Energy Consumption (SEC). Energy used per unit of output (kWh per tonne of product, kWh per square metre, etc.).
- Specific Carbon Emissions. Carbon emitted per unit of output.
- Absolute energy reduction. Total energy use against a base year.
Targets are set for each two-year target period. Sites are assessed against their targets at the end of each period. Sites that meet targets retain the discount automatically. Sites that miss targets pay a buy-out fee per tonne of CO2 over the target to maintain CCA status, or risk being removed from the scheme.
How to join a CCA
The process:
- Identify the qualifying sector. Use the Environment Agency list to confirm whether the business activity qualifies.
- Contact the relevant Sector Association. Most sectors have a single Association handling CCAs for the sector.
- Apply for membership. The Sector Association reviews the application, including the site eligibility and the energy use baseline.
- Sign the Sector Agreement. The site agrees to the targets and reporting obligations.
- Notify the energy supplier. Provide the CCA registration to the supplier so the discount can be applied to bills.
- Annual reporting. Submit energy use and output data to the Sector Association each year.
The membership fee paid to the Sector Association covers the administrative cost of running the scheme. Fees vary by sector and site size, typically £500 to £3,000 per year.
CCA scheme future
The current CCA scheme runs until 31 March 2026. The UK government has consulted on a successor scheme to start in 2026, focused on continuing the CCL discount for energy-intensive industries while updating the framework to align with net zero policy.
Until clarity emerges on the successor scheme, existing CCA members continue under the current rules. The Environment Agency and Sector Associations publish updates as the policy develops.
a Climate Change Agreement (CCA) FAQs
What is a Climate Change Agreement?
A voluntary agreement between a UK industry sector and the Environment Agency under which the sector commits to energy efficiency targets in exchange for a substantial discount on the Climate Change Levy.
How much does a CCA save on CCL?
For 2024-25, the CCA discount is 92 per cent on electricity CCL (effective rate 0.062 p/kWh instead of 0.775 p/kWh) and 89 per cent on gas CCL (0.085 p/kWh instead of 0.775 p/kWh).
Which sectors can join a CCA?
Around 50 UK industry sectors qualify, primarily energy-intensive sectors including ceramics, chemicals, food and drink production, paper, steel, cement, plastics, textiles, data centres, and specific horticulture operations.
How do I join a CCA?
Identify the qualifying sector, contact the relevant Sector Association (trade body), apply for membership, sign the Sector Agreement, notify the energy supplier, and submit annual energy use and output reports.
How are CCA targets set?
Each Sector Association negotiates targets specific to its sector with the Environment Agency. Targets are usually energy or carbon per unit of output (Specific Energy Consumption or Specific Carbon Emissions) over two-year target periods.
What happens if I miss CCA targets?
The site can pay a buy-out fee per tonne of CO2 over the target to maintain CCA status, or be removed from the scheme. Removal means the standard CCL rate applies on subsequent bills.
How much does CCA membership cost?
The administrative fee paid to the Sector Association varies by sector and site size, typically £500 to £3,000 per year. The CCL savings on energy-intensive sites usually substantially exceed the membership cost.
When does the current CCA scheme end?
The current scheme runs until 31 March 2026. A successor scheme is under consultation by the UK government, focused on continuing the CCL discount for energy-intensive industries in a framework aligned with net zero policy.