Climate Change Agreements: How to Cut Your CCL Bill by up to 92%

What a Climate Change Agreement is, who qualifies, the targets involved, and the levy savings on offer for energy-intensive UK businesses.

Climate Change Agreement – If your business runs an energy-intensive process, there is a scheme that can cut your Climate Change Levy bill by up to 92% on electricity and 89% on gas. It is called a Climate Change Agreement, and a surprising number of eligible firms either do not know it exists or assume they cannot qualify.

A Climate Change Agreement is a voluntary deal between an industrial sector and the Environment Agency. You commit to energy efficiency or carbon targets, and in return you pay a heavily reduced rate of Climate Change Levy. For a high-consumption site, the saving runs comfortably into five or six figures a year.

What a Climate Change Agreement Is

A Climate Change Agreement, or CCA, is a contract that rewards energy efficiency with tax relief. The Climate Change Levy is a tax added to business electricity and gas, and for energy-hungry operations it is a meaningful cost in its own right. A Climate Change Agreement lets you reclaim most of that levy, provided you keep hitting agreed efficiency targets.

The scheme is administered by the Environment Agency. It works in two tiers. An umbrella agreement, held by a trade association, covers a whole sector and sets the rules. Individual sites or companies then hold their own underlying agreements beneath it. You can read the official overview on GOV.UK.

Who Qualifies

Eligibility is tied to the type of process you run, not simply how much energy you get through. The scheme was built for sectors exposed to international competition where energy makes up a large share of costs.

In practice that has meant industries such as chemicals, food and drink, paper, ceramics, steel, cement, foundries and plastics, along with dozens of more specialised processes. More than fifty sectors hold a qualifying umbrella agreement, and the list stretches to less obvious operations like intensive pig and poultry farming and some supermarket cold storage.

The catch is twofold. Your sector needs a trade association running the umbrella agreement, and your specific process has to meet the eligibility definition. It is worth checking properly rather than assuming you are out, because the boundaries are narrower and odder than most people expect.

The Targets You Sign Up To

The relief is not unconditional. In exchange for the reduced levy you take on a target, usually framed as an improvement in energy efficiency or a cut in carbon emissions per unit of output, measured across a fixed period.

Performance is reviewed at the end of each target period. Hit the target and your reduced rate rolls on. Miss it and you either pay a buy-out fee to cover the shortfall or lose the relief altogether. The buy-out is often modest next to the levy saving, but it should not be treated as a soft fallback.

Measurement is where many sites come unstuck. You need reliable consumption and output data to prove progress, which is exactly where good carbon reporting earns its keep.

What a Climate Change Agreement Is Worth

The numbers are the reason the paperwork is worth it.

A Climate Change Agreement currently delivers a discount of up to 92% on the Climate Change Levy for electricity and up to 89% for gas and most other fuels, with LPG at 77%. Those percentages are set by government and reviewed periodically, so the exact figures move over time, but the direction is always a deep cut.

Put that against the levy itself. For a manufacturer pulling several gigawatt hours a year, the Climate Change Levy alone can total tens of thousands of pounds. Reclaiming the bulk of it changes the shape of an energy budget, and it stacks neatly with savings found elsewhere in your non-commodity costs.

How Long the Scheme Runs

The CCA scheme has been through several rounds and was due to wind down, but the government has kept it going. A new agreement period has extended the levy discount well into the current decade, giving eligible businesses continued access to the reduced rates rather than a cliff edge.

That matters for planning. A Climate Change Agreement is not a one-off rebate. It is an ongoing commitment with reporting attached, so it is worth entering with a clear view of how you will measure and maintain performance over successive target periods.

Making a Climate Change Agreement Work

Two things separate the firms that benefit from those that leave money on the table. First, knowing you qualify at all, since plenty of eligible operators have simply never checked. Second, having the data discipline to keep meeting targets once you are in.

This sits naturally alongside a wider net zero strategy. The same efficiency work that protects your relief also lowers consumption, cuts emissions and strengthens the story you tell customers and tender panels.

Catalyst helps UK businesses check eligibility for a Climate Change Agreement, manage the targets and reporting, and fold the relief into a broader plan for cutting energy cost and carbon. If you run an energy-intensive process and have never tested whether you qualify, speak to our team.

Further reading: see the current CCL rates for 2026/27, and how a Climate Change Agreement reduces the levy you pay.

Related service: Carbon Reporting, how Catalyst helps businesses measure, report and act on their energy use and emissions.