Climate change agreements · a voluntary CCL discount
Climate change agreements: the CCA scheme for 2026 to 2030
Climate change agreements give an eligible energy-intensive facility a 92% discount on the Climate Change Levy for electricity and 89% for gas, in return for meeting energy or carbon targets.
A new scheme began on 1 January 2026 with three target periods to 2030, and three new processes join on 1 January 2027.
It is voluntary relief, not a reporting duty, and it does not discharge SECR, ESOS or the UK ETS.
The mechanism
A tax relief, not a reporting duty
Under paragraph 44 of Schedule 6 to the Finance Act 2000, a supply of energy is a reduced-rate supply if it goes to a facility certified as covered by a climate change agreement for that period.
A facility opts in, agrees energy efficiency or carbon targets, and in exchange pays a reduced rate of Climate Change Levy on its gas and electricity.
There are two layers: an umbrella agreement between a sector association and the Environment Agency, listing the eligible processes, and an underlying agreement held by the operator for its facility, carrying the facility’s target.
That makes a CCA structurally unlike SECR, a mandatory annual-report disclosure, and ESOS, a mandatory periodic energy assessment.
A company can be outside the CCA scheme and still owe SECR or ESOS, and holding a CCA is not evidence of compliance with either.
The UK has no instrument called a carbon tax: the Climate Change Levy is a tax on business energy, and a CCA is relief from it.
Who does what
DESNZ owns CCA policy, including which processes are admitted.
Environment Agency enforces individual businesses: sets targets and ensures compliance, UK-wide.
HMRC owns the regulations defining the sectors and the interaction with CCL reliefs.
Sector associations hold umbrella agreements and are the first point of contact.
Source: DESNZ, April 2026
The current scheme
Three target periods, administered to 2033
| Target period | Dates | Note |
|---|---|---|
| Target period 7 | 1 January 2026 – 31 December 2026 | First period of the new scheme |
| Target period 8 | 1 January 2027 – 31 December 2028 | New processes can join from 1 January 2027 |
| Target period 9 | 1 January 2029 – 31 December 2030 | Last target period |
| Administration | To 31 March 2033 | Statutory guidance ¶7 |
The previous scheme’s last target period, target period 6, ended on 31 December 2024.
The 2024 government response confirmed a new six-year scheme, projected to be worth an estimated £1.9bn over the period.
The target periods are now in law: SI 2025/813 regulation 2 amends the 2012 Administration Regulations to define them.
The 2026 statutory guidance requires the Environment Agency to administer the new scheme through to 31 March 2033.
Certification period 7 has been extended to 30 June 2027, so obligations and decisions from the old scheme continue where they remain live.
The Environment Agency’s general “Climate change agreements” page was last updated on 2 March 2022 and still leads with the scheme being extended until March 2025; use the statutory guidance and Managing your climate change agreement instead.
Eligibility
The process decides, and the 70% rule
Eligibility turns on the process, not the size of the company: a facility must carry out a process listed in an umbrella agreement.
Regulation 3(1)(a) of the Eligible Facilities Regulations adds the one numeric test: at least 70% of the reckonable energy supplied must be intended for the installation, installations or parts of installations on the site.
No energy-intensity or import-penetration percentage appears in those Regulations or in SI 2026/826.
Where less than 70% of site energy goes to the eligible installation, the installation must be permanently sub-metered.
The statutory guidance turns the rule into a working one: other activities may be included in the facility if they use no more than 3/7ths of the installation’s reckonable energy, and if included they should be sub-metered too.
A kiln using 700 MWh can carry up to 300 MWh of other site activity, because 700 is 70% of 1,000; add a warehouse using 350 MWh and the share falls to about 67%, so the facility must be drawn round the kiln.
Energy used in UK ETS processes counts towards the 70% rule, and operators confirm the rule every year in the performance report.
Joining
Three processes join on 1 January 2027
SI 2026/826, made on 7 July 2026, admits three new processes through paragraphs 39 to 41 of its Schedule, from 1 January 2027.
They are the mechanical recycling of plastic, the packaging of spirits, and the production of automotive grade battery cells.
New entrants apply through the sector association for their process.
In existing sectors, the statutory guidance allows applications between 1 January and 31 August in each year from 2026 to 2029, and a new facility cannot be added unless it is added before 1 January 2030.
New entrants in newly eligible sectors get a separate application window, communicated by the Secretary of State once the amendments are in force.
A new entrant with a 2022 baseline takes the sector commitment for each target period whenever it joins; one with a later base year has the earlier improvement assumed and the rest interpolated.
Targets and buy-out
Facility targets, and a buy-out price that is now a formula
Targets under the new scheme are set at facility level; the old practice of grouping sites into a single target unit has gone.
All three target periods are measured against a 2022 base year, and operators had to provide at least 12 months of continuous, representative 2022 data for each facility.
UK ETS-covered fuel is excluded from the energy against which CCA targets are set and buy-out is calculated, though operators still report it.
A facility that misses its target can pay a buy-out fee for each tonne of CO₂e by which it falls short, and stay eligible.
For target periods 1 to 6 the price was a fixed figure in regulation 12; from target period 7 it is a formula tied to the CCL main and reduced rates for electricity and gas on 1 April of the period’s first year, converted with fixed emission factors.
DESNZ’s Technical Annex works the target period 7 figure through to £37 per tonne CO₂e, rounded to the nearest pound.
SI 2026/826 regulation 7 changes one input, factor H — the carbon emission factor for gas — from 0.0497 to 0.0498 from 1 January 2027.
A page quoting a flat £14, £18 or £25 a tonne is describing a superseded target period.
Timing matters as much as price: under the statutory guidance, a buy-out fee paid after a new certification period starts certifies the facility only from the date payment is received.
The discount
What a CCA is worth, in the levy you do not pay
The Climate Change Levy is charged on energy supplied to non-domestic users, and a CCA holder claims the reduced rate from its supplier.
HMRC’s rates page sets the main rate for electricity and gas at £0.00801 per kWh from 1 April 2026 and £0.00827 from 1 April 2027; LPG stays at £0.02175 per kg.
The CCA discounts are the same in all three years: 92% for electricity, 89% for gas, 77% for LPG and 89% for other taxable commodities.
Put the other way round, a CCA facility pays 8% of the main rate on electricity and 11% on gas, as HMRC’s note on the April 2026 rates sets out.
The calculator’s default site uses 10 GWh of electricity and 20 GWh of gas: £240,300 of levy at the main rates against £24,030 with a CCA, a saving of £216,270 a year from April 2026.
At the April 2027 rates the saving rises to £223,290, because the reduced rates are a fixed percentage of rising main rates.
That saving is what a missed target puts at risk, and the figure to set against a buy-out fee; Carbon Price Support has its own rates and is left out.
Climate Change Levy · with and without a CCA
Levy at the main rates: £240,300.00
Levy with a CCA: £24,030.00
Saving: £216,270.00 a year
A CCA facility pays 8% of the main rate on electricity, 11% on gas and 23% on LPG.
The saving is what a missed target puts at risk, and the figure to set against any buy-out fee.
The 70% rule
66.7% to the eligible installation — below 70%: draw the facility round the installation and sub-meter it.
Under the 3/7 rule, up to 300 MWh of other activity can be included in the facility, permanently sub-metered.
Sources: HMRC, Climate Change Levy rates; SI 2012/2999 reg 3(1)(a); DESNZ, CCA statutory guidance 2026, ¶13.
Carbon Price Support is separate and not included.
Nothing you enter is stored or sent.
CCL rates for CCA holders
The main rates and the reduced rates
| Commodity | Main rate from 1 April 2026 | Main rate from 1 April 2027 | CCA discount | A CCA facility pays |
|---|---|---|---|---|
| Electricity | £0.00801 per kWh | £0.00827 per kWh | 92% | 8% of the main rate |
| Natural gas | £0.00801 per kWh | £0.00827 per kWh | 89% | 11% of the main rate |
| LPG | £0.02175 per kg | £0.02175 per kg | 77% | 23% of the main rate |
| Other taxable commodities | £0.06264 per kg | £0.06468 per kg | 89% | 11% of the main rate |
| Rates from | Levy at the main rate | Levy with a CCA | Saving |
|---|---|---|---|
| 1 April 2026, electricity (10 GWh) | £80,100 | £6,408 | £73,692 |
| 1 April 2026, gas (20 GWh) | £160,200 | £17,622 | £142,578 |
| 1 April 2026, total | £240,300 | £24,030 | £216,270 a year |
| 1 April 2027, total | £248,100 | £24,810 | £223,290 a year |
The discounts did not change for the new scheme; the pound value of the relief rises each April because the reduced rates are a fixed share of main rates that rise.
The government’s 2024 response put the value of the new scheme at an estimated £1.9bn over six years.
The levy is collected by the energy supplier, so a facility claims the reduced rate through its supplier on the strength of its CCA certificate.
CCAs and ESOS
The data helps; the ESOS duty remains
| Part of a food group | Energy source for ESOS | Audit route |
|---|---|---|
| CCA factory 1 — the facility | CCA milestone data for 2026 | The CCA audit, if a lead assessor conducted, verified or reviewed it and it meets the ESOS minimum standards |
| CCA factory 1 — outside the facility | Separate metering or bills | ESOS audit if within significant energy consumption |
| CCA factory 2 | CCA milestone data for 2026 | New ESOS audit: its CCA audit was not reviewed by a lead assessor |
| Non-CCA factory | Bills and meter data | ESOS audit or ISO 50001 |
| Head office and fleet | Bills, fuel cards and mileage | ESOS audit if within significant energy consumption |
The Environment Agency’s ESOS Phase 4 guidance, at §4.5, lists the UK ETS, CCAs, SECR, Green Deal Assessments and Display Energy Certificates, and says participation does not automatically count as ESOS compliance for the energy they cover.
Appendix C says CCA milestone data can be used in the ESOS assessment, and that a CCA audit may count as an ESOS energy audit if a qualified lead assessor conducted, verified or reviewed it and it meets the ESOS minimum standards.
It then warns that the participant must extend its data to any additional on-site energy use and sites outside the CCA.
Appendix C still speaks of the CCA target unit; read it as the facility boundary under the new scheme.
Target period 7 is calendar 2026, a 12-month period that includes the ESOS qualification date of 31 December 2026, so CCA data can anchor the ESOS reference period.
The group still needs the whole-group energy total, a lead assessor review, director sign-off and notification by 5 December 2027; see the ESOS overview, the ESOS guide and the ESOS energy audit.
Beside the other regimes
One voluntary relief, three mandatory duties
| Regime | Voluntary or mandatory | What it asks for |
|---|---|---|
| Climate change agreements | Voluntary | Facility energy or carbon targets for a CCL discount |
| ESOS scheme | Mandatory for large undertakings | A periodic energy assessment, or ISO 50001 |
| SECR | Mandatory for in-scope companies | Annual disclosure of UK energy use and emissions |
| UK ETS | Mandatory for covered activities | Verified emissions reports and surrender of allowances |
A site running a certified energy management system should read ISO 50001 vs ESOS; the two mandatory disclosure regimes are compared on ESOS vs SECR.
The energy data a CCA facility reports is a starting point for the group inventory in carbon accounting.
By reader
What a CCA means for your organisation
| You are | What applies | What to do | By when |
|---|---|---|---|
| A site already in a CCA | Facility-level targets against a 2022 base year for target periods 7, 8 and 9; relief continues while the facility meets its target or pays the buy-out fee | Confirm the 70% rule each year in the performance report, keep UK ETS energy reported separately, and pay any buy-out fee before the next certification period starts | Target period 7 ends on 31 December 2026; target period 8 runs to 31 December 2028 |
| A plastics recycler, spirits packer or battery-cell maker | SI 2026/826 makes your process eligible from 1 January 2027 | Contact the sector association that will hold the umbrella agreement, test the 70% rule on the last 12 months of energy, and plan sub-metering if the installation takes less | Eligible from 1 January 2027; new facilities must be added before 1 January 2030 |
| A large group with CCA sites | ESOS Phase 4 for the whole UK group if it qualifies on 31 December 2026; the CCA covers only the facility energy | Use CCA data for the facility, collect the rest, and check whether the CCA audit was conducted, verified or reviewed by an ESOS lead assessor | ESOS notification by 5 December 2027 |
A site in both the UK ETS and a CCA reports UK ETS energy to the Environment Agency but leaves it out of the target and the buy-out sum.
The energy data that feeds the CCA performance report is the same data an ESOS assessment and an SECR disclosure need, so collecting it once at meter level saves work three times.
Missing a target is not the end of relief, but paying late is: a buy-out fee received after the new certification period starts certifies the facility only from the date of payment.
Dates
From the old scheme to the end of administration
The dates beside this come from the instruments, HMRC’s rates page and the statutory guidance.
The ESOS dates are included because many CCA holders sit in large groups that qualify.
Every UK regime’s dates are on the regulation timeline.
- 31 Dec 2024Target period 6 ends
Last period of the previous scheme.
- 1 Jan 2026New scheme; target period 7
Against a 2022 base year.
- 7 Jul 2026SI 2026/826 made
- 31 Dec 2026TP7 ends; ESOS qualification date
- 1 Jan 2027TP8 begins; new processes; factor H 0.0498
- 1 Apr 2027CCL main rate £0.00827/kWh
- 30 Jun 2027Certification period 7 ends
- 31 Dec 2030TP9 ends
- 31 Mar 2033Administration ends
Terms
CCA terms, with where each is defined
| Term | Where | Meaning |
|---|---|---|
| Climate Change Levy | FA 2000 Sch 6 | The tax on energy supplied to non-domestic users that a CCA reduces |
| Reduced-rate supply | Sch 6 para 44 | A supply to a certified CCA facility, charged at a percentage of the main rate |
| Umbrella agreement | CCA scheme | The agreement between a sector association and the Environment Agency listing eligible processes |
| Underlying agreement | CCA scheme | The operator’s agreement for its own facility, carrying its target |
| Facility | SI 2012/2999 reg 3 | An installation or site where at least 70% of the reckonable energy is intended for the eligible installation |
| Reckonable energy | SI 2012/2999 | The energy counted in the 70% test, including energy used in UK ETS processes |
| Target period | SI 2012/1976 reg 2 | The period over which performance is measured: 2026; 2027–28; 2029–30 |
| Certification period | CCA scheme | The period for which a facility is certified for the reduced rate; period 7 runs to 30 June 2027 |
| Buy-out fee | SI 2012/1976 reg 12 | A payment per tonne of CO₂e by which a facility misses its target |
| Factor H | reg 12(3) | The carbon emission factor for gas in the buy-out formula: 0.0497, then 0.0498 from 1 January 2027 |
| Milestone data | ESOS Appendix C | CCA performance data the ESOS guidance says can be used in an ESOS assessment |
Test yourself
Six CCA claims, true or false
The CCA errors in circulation come from old pages: a scheme that “ended in 2025”, a flat buy-out price, and a CCA treated as ESOS compliance.
Each answer names the instrument or guidance paragraph that settles it.
For a harder case you can put it to the member agent after creating a free account, or book a free 15-minute call.
Climate change agreements: true or false?
A climate change agreement is a mandatory reporting duty like SECR.
The CCA scheme ended in March 2025.
The CCA buy-out price is £25 a tonne.
A site where 65% of energy goes to the eligible kiln can certify the whole site.
Holding a CCA discharges ESOS for the facility’s energy.
Plastics mechanical recyclers can join from 1 January 2027.
0 of 6 answered.
Nothing you choose is stored or sent.
Frequently asked
Climate change agreements, answered
What are climate change agreements?
Voluntary agreements under which an eligible energy-intensive facility agrees energy efficiency or carbon targets and, in return, pays a reduced rate of the Climate Change Levy on its energy.
The legal mechanism is paragraph 44 of Schedule 6 to the Finance Act 2000.
The Environment Agency administers the scheme for the whole UK.
Is there a new climate change agreement scheme?
Yes.
A new scheme started on 1 January 2026 with three target periods: 2026, 2027 to 2028, and 2029 to 2030.
Targets are set against a 2022 base year, and the Environment Agency must administer the scheme through to 31 March 2033.
Who is eligible for a climate change agreement?
A facility that carries out an eligible process listed in an umbrella agreement, where at least 70% of the reckonable energy supplied is intended for the eligible installation or installations.
From 1 January 2027 three processes join: mechanical recycling of plastic, packaging of spirits and production of automotive grade battery cells.
How much is the CCL discount under a CCA?
From 1 April 2026 a CCA facility pays 8% of the main rate on electricity, 11% on gas and 23% on LPG — discounts of 92%, 89% and 77%.
The main rate for electricity and gas is £0.00801 per kWh from 1 April 2026 and £0.00827 from 1 April 2027.
How do I join the CCA scheme?
Through the sector association that holds the umbrella agreement for your process.
New entrants in existing sectors can apply between 1 January and 31 August each year from 2026 to 2029, and no new facility can be added on or after 1 January 2030.
What happens if a facility misses its CCA target?
It can pay a buy-out fee for each tonne of CO₂e by which it falls short and stay eligible.
From target period 7 the price is a formula in regulation 12, tied to the CCL rates; DESNZ’s Technical Annex works the TP7 price to £37 a tonne.
A fee paid after the next certification period starts restores relief only from the date of payment.
Does a climate change agreement count towards ESOS?
Not automatically.
The Environment Agency’s ESOS Phase 4 guidance says participation in CCAs, the UK ETS and similar schemes does not automatically count as ESOS compliance.
CCA data can be used, and a CCA energy audit may count if an ESOS lead assessor conducted, verified or reviewed it and it meets the ESOS minimum standards.
Can a site be in both the UK ETS and a CCA?
Yes.
Energy used in UK ETS processes counts towards the 70% eligibility rule, but UK ETS-covered fuel is excluded from the energy against which CCA targets are set and buy-out is calculated, so the two schemes do not charge twice on the same energy.
Is the Environment Agency’s CCA page out of date?
Its general “Climate change agreements” guidance page was last updated on 2 March 2022 and still leads with the scheme being extended until March 2025.
Use the 2026 statutory guidance, the legislation and the Environment Agency’s Managing your climate change agreement page for the scheme’s current life.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner.
Secondary commentary is never the source for a number.
- legislation.gov.ukFinance Act 2000, Schedule 6, paragraph 44
The mechanism: a supply to a certified CCA facility is a reduced-rate supply.
- legislation.gov.ukSI 2025/813, regulation 2 — the target periods
TP7: 2026; TP8: 2027–2028; TP9: 2029–2030.
- legislation.gov.ukSI 2012/1976, regulation 12 — the buy-out fee
Fixed prices for TP1–6; a formula from TP7.
- legislation.gov.ukSI 2012/2999, regulation 3 — eligible facilities
At least 70% of reckonable energy for the eligible installation.
- legislation.gov.ukSI 2026/826 (made 7 July 2026)
Three new processes and factor H at 0.0498, both from 1 January 2027.
- DESNZClimate Change Agreements: statutory guidance 2026
Administration to 31 March 2033; 2022 base year; the 3/7 rule; application windows; late buy-out fees.
- DESNZCCA scheme: extension to new sectors and processes (April 2026)
Who runs the scheme: DESNZ, the Environment Agency and HMRC.
- DESNZCCA Technical Annex (February 2026)
The TP7 buy-out worked to £37 per tonne CO₂e, rounded to the nearest pound.
- DESNZClimate Change Agreements: government response (2024)
A new scheme worth an estimated £1.9bn over six years.
- HMRCClimate Change Levy rates
Main rates from 1 April 2026 and 2027, and the CCA percentage discounts.
- HMRCClimate Change Levy: changes to rates from 1 April 2026
The reduced rates as a percentage of the main rates.
- Environment AgencyManaging your climate change agreement (CCA)
The live operational page for operators.
- Environment AgencyComply with ESOS Phase 4 — §4.5 and Appendix C
CCA participation does not automatically count as ESOS compliance; when a CCA audit can.