The Climate Change Agreements (CCA) scheme is a voluntary scheme for firms in certain energy and trade-intensive industry sectors, which offers discounts on the Climate Change Levy (CCL) in exchange for firms meeting targets for carbon or energy efficiency improvements (or making ‘buy-out’ payments if targets are missed). Forming part of the Government’s Clean Growth Strategy, the scheme aims to support the retention of energy-intensive industries in the UK while improving the energy efficiency of these industries.
CAG Consultants led the evaluation of the Second Climate Change Agreements scheme on behalf of BEIS, in partnership with Winning Moves, University College London and Cambridge Econometrics, with Verco and Strategy Development Solutions as advisers. This was a complex, theory-based evaluation involving micro-econometric analysis and macro-economic modelling, as well as qualitative and quantitative research and analysis of CCA scheme data.
The evaluation found that the CCA is a well-established scheme that is popular with industry, with effective systems in place for delivery. While slightly more than half of companies in the scheme met their targets in the first three target periods of the second CCA scheme, the level of underperformance was low. Almost all CCA participants had taken action on energy efficiency since the start of the scheme. Although there are many influences on energy efficiency, micro-econometric evidence found that electricity consumption on CCA sites was at least 4% lower than on similar sites subject to the CCL, implying that the scheme was achieving its energy efficiency objectives. The research suggested that the CCA tended to have more influence on specific categories of companies.
Overall, the evaluation found that benefits to society outweighed the costs of the scheme, although restricting the scheme to more energy- and trade-intensive sectors could possibly improve cost-effectiveness further. The evidence suggested that the contribution of any similar policy in the future to support clean growth will be strongly influenced by the tightness of the scheme’s targets.
The full report can be found here.
Evaluation-of-the-second-Climate-Change-Agreements-scheme.pdf