The chemical and pharmaceutical industry is fundamental to modern society. With an immense variety of products, from vital medicines and foods, the construction of buildings, to transport and leisure, the industry truly does have an impact on virtually every aspect of our daily lives.
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Alongside the 2024 Autumn Statement, the Department for Energy Security and Net Zero published a consultation on proposals for a new, six-year Climate Change Agreements (CCA) scheme, starting in 2025.
The current scheme has been extended twice already, initially from 31 December 2020 to 31 December 2022 (Target Period 5) and then to 31 December 2024 (Target Period 6). As it stands, the current targets would end on 31 December 2024 with reduced Climate Change Levy (CCL) rates available until 31 March 2027, for those who meet their obligations under the scheme.
2021’s Industrial Decarbonisation Strategy had committed the government to further assessment of the purpose and targeting of a long-term CCA scheme and this is what we are seeing come through in the latest consultation. Some of the proposals for the new scheme are good: they have not changed the eligibility requirements for our sector; there will be no gap in CCL relief; new entrants will be able to join at any time; there will be greater consideration of deep decarbonisation investment; there are efforts to streamline reporting; prior proposals to mandate Energy Management Systems have been removed; and the scheme will extend up to 31 December 2030, with CCL relief available up until 31 March 2033.
But there are some less good elements too: the base year will move again, from 2018 to 2022, requiring further data collection; the ability to ‘bubble’ facilities together under one target has been removed; and the reporting of energy efficiency and decarbonisation action will be required.
The deadline for responding to the proposals for a new scheme is 14 February and we are in the process of engaging with our members through our Energy and Climate Change Policy Network, to develop our position. That Network has secured a meeting with the responsible government officials on 11 January 2024 and you are welcome to join, contact Rich Woolley (WoolleyR@cia.org.uk) for details. Otherwise, we will submit our response in February and begin negotiations for our sector targets in the same month, with the aim to submit our evidenced target proposal in July.
The CIA has worked with the Department for Energy Security and Net Zero to help inform and develop one element of the Act, the ‘British Supercharger’ policy support package, to deliver a meaningful and permanent solution to the high electricity prices faced by domestic manufacturers.
