Understanding the new CCA Scheme

In January 2026, Climate Change Agreements (CCA) entered a new phase. Eligibility criteria for the new scheme remain in line with phase 2, but there are numerous changes and updates.

While at face value these appear to be a collection of small changes, they will create significant work for existing CCA holders to adapt to them and will distort current CCA performances for many.

What is a Climate Change Agreement?

Climate Change Agreements (CCA) are voluntary agreements between eligible organisations and the UK government to encourage more energy-efficient behaviours. The scheme enables eligible participants to receive a billing discount on their climate change levy (CCL) – a tax paid on electricity, gas, LPG, and coal, while being measured against energy efficiency targets.

At the end of each target period, CCA holders must report their progress against the targets. Failure to meet these targets can result in carbon buyout payments; however, savings usually far exceed carbon costs.

New CCA applications can be made from 1st January 2026 to August 2026. This will secure savings from the point of activation onwards.

What is different in Phase 3?

Although on the face of the new phase there may seem to be only small changes but not understanding these changes and what they mean could affect current holders if misunderstood.

Eligibility criteria for the new scheme will remain in line with phase 2. These include over 50 energy-intensive industries, such as chemical production, steel, paper, food and drink processing, and intensive agriculture (poultry/pigs). However, phase 3 will see changes to targets, the removal of bubbles, updates to conversion factors and carbon costs, and, importantly, credit for onsite generation, which has been well received by many.

Benefits

Companies in eligible sectors can benefit from substantial savings on energy costs, with discounts on Climate Levy Charges of up to:

• 92% on electricity
• 89% on gas

Having a CCA in place also demonstrates a clear commitment to reducing emissions, which can strengthen brand reputation, but it can also help to embed energy-efficient behaviours to deliver further savings.

Key Dates:

• CCA phase 3 commenced in January 2026, with a CCL savings mechanism in place until 2033. Target periods (TP) will run from 2026 to 2030.
• The scheme is open to new applications from those in eligible sectors, between 1st January 2026 and August 2026.
• The new phase of the scheme begins with Target Period 7: January 1st 2026 – December 31st 2026
• CCA holders can submit changes to the split of fixed and variable base year energy until 1st May 2026

Working with the right partner

CCAs are coming under greater scrutiny, which is making both the application process and ongoing scheme management more complex and time-consuming. Increasingly, CCA holders will have to supply more detailed evidence to retain their place in the scheme. Proper CCA management is essential to protect businesses from unexpected compliance issues and fines, and ensures they maximise savings. Without regular tracking, businesses could face costly fines or unexpected carbon costs.

Working with Envantage means taking the stress out of CCA application and management. Envantage can check your organisations elibilgity, as well as take you from application to ongoing management. Speak to our expert team to find out more here.

Categories

• Compliance

Tags

• CCA
• Climate Change Agreements

Share this article