Climate Change Agreements: performance of companies

Climate Change Agreements: performance of companies

The Environment Agency has published the latest performance of companies in the Climate Change Agreements (CCA) scheme. The second biennial report set out the energy performance achieved, and the results were mixed.

CCAs are incentivised by a significant discount from the Climate Change Levy (CCL) on energy bills, and each participant has a carbon emissions target to achieve by 2020. Milestones are set at biennial intervals from 1 January 2013 to measure progress. Individual operators are required to achieve emission sector objectives. The second target period (TP2) covers performance from 1 January 2015 until 31 December 2016.

The average success rate among Utilitywise clients for TP2 was about 9% higher than the rate for the CCA scheme as a whole.

Higher pass and fail ratio over TP2

The Environment Agency (EA) report reveals that during TP2 there were 3,186 ‘target units’, or specific facilities, in the CCA scheme. This is 203 lower than the first target period (TP1) figure, indicating that some businesses have pulled out of the scheme. However, the average success rate for the scheme as a whole was 53%. In comparison, TP1 saw 51% of participants over-achieving their targets and 49% under-performing.

The ratio among Utilitywise clients for TP2 was 62%; higher than the overall scheme. We’ve helped sites meet their targets, aided companies to get closer to their CCA target, and achieved a lower average under-performance deficit than the scheme as a whole. Over the two-year period some companies have made significant investments in energy efficiency, which help to improve their performance.

Companies struggling to meet their targets have two options to remain CCA compliant:

  • Use banked surplus from the previous period’s over-performance against their carbon emission target, or;
  • Pay a buy-out fee.

The EA report suggests 155 operators used their banked surplus, while 60 left without paying their buy-out fee in the second period. The total buy-out fee paid during TP2 was £22.2 million, a modest increase of £0.1 million over the previous period. However, the EA claimed that over 250 corrections have been made to TP1, so it is feasible to expect a number of subsequent corrections to TP2.

Tougher CCA buy-out fee for next two periods

After industry consultation, the Government has decided not to review and introduce tougher emission sector targets originally agreed in 2012. However, for periods three and four the buy-out fee – which was set at £12 per tonne of CO2e in TP2 – will increase to £14 per tonne of CO2e. Thereafter, the fee will rise with inflation. This will increase the cost to companies that fail to meet their CCA target and choose to pay the buy-out fees instead.

Utilitywise can help you with CCA compliance

With a team of experienced industry professionals and skilled, dedicated analysts, we’re able to offer valuable support to CCA participants. Our service includes a detailed review of any existing agreements, including bringing your company’s evidence packs up to the required standard for compliance with an EA or HMRC audit, a historic assessment as to whether all due CCL rebate has been received, and an in-depth look at the drivers behind performance.

With the average success rate among our clients for TP2 about 9% higher than the rate for the CCA scheme as a whole, why not come to Utilitywise for help with your CCA? You can contact us by calling 01527 511 757, emailing corporate@utilitywise.com, or by visiting our website.

Ross Moffat

Posted by on Wednesday, the 20. December at 12.04

Ross Moffat has been a part of the Market Intelligence team at Utilitywise since early 2014. His responsibilities include delivering Market Intelligence reports to clients and managing the Utility Insights Twitter account. Ross has a first class Honours degree in Business and Marketing from the University of Stirling.