August Newsletter

August Newsletter 14th August 2017

Climate Change Agreements

Climate Change Agreements (CCAs) originally came into force in 2001 as the first response by the UK Government to meet the commitments of the Kyoto protocol and reduce UK Greenhouse Gas emissions.

The aim of the CCA is to encourage greater energy efficiency by increasing the cost of energy with the addition of a Climate Change Levy (CCL), but to reduce this tax burden for energy-intensive industries who voluntarily commit to a series of energy reduction targets.

  • Each CCA is a voluntary agreement made between an industrial site (facility) and the Government
  • A “base year” energy performance value is calculated, and a series of improvement targets is agreed
  • In return for the commitment to meet those energy improvement targets, reduced amounts of Climate Change Levy (CCL) is paid on energy bills
  • If targets are not achieved, the excess energy is converted to “equivalent CO2 emitted” which must be paid for

Climate Change agreements are not open to all. There are strict criteria that define what is considered an ‘eligible process’, and it is the energy used by these ‘eligible processes’ and their ‘directly associated activities’ that is charged at a reduced rate of CCL.

The original eligibility criteria was limited to manufacturing processes described in the IPPC (now EPR) regulations, but there have since been a number of amendments to include specific energy-intensive manufacturing sectors such as heat treatment and plastics. More recently this has included data centres and cold stores.

Briar Associates have been involved with Climate Change Agreements since their inception. We have assisted over 150 organisations in setting up individual CCAs and managing those agreements on an ongoing basis.

This includes performance monitoring against targets, periodic data submissions, structural changes, carbon buy-out, and much more. Contact us today for a free assessment.

Current Market Position

Wholesale energy prices fell early July on the back of improved supply to the UK and a strengthening of sterling, but recovered as the month came to a close.

As the month progressed, prices fell as the UK saw stronger Norwegian gas flows, LNG (Liquefied Natural Gas) arrivals and lower demand causing oversupply. Higher wind speeds mid month also helped to keep the markets low.

Prices started to recover mid month and continued to climb as Norwegian gas flows dropped and maintenance at Kollsnes was extended until early October. Oil prices also rose over the $50 mark following an announcement from Saudi Arabia that it would cut its exports to help accelerate the rebalancing of the global oil market.

Looking ahead UK gas production is expected to fall due to the start of major maintenance at the Forties platform but the UK is expecting around five LNG cargoes during August.

climate change