Archived News Articles
2006 Budget Report:
Climate Change Levy to increase in line with Inflation from 1 April 2007
The 2006 Budget sets out the next stage in the Government's strategy for tackling the global challenge of climate change and outlines an increase in the climate change levy in line with inflation, from 1 April 2007. This is to continue to encourage energy efficiency in the business sector.
The new rates, effective from 1st April 2007 will be:
Electricity: 0.441 p/kWh up from the existing rate of 0.43 p/kWh
Gas: 0.154 p/kWh up from the existing rate of 0.15 p/kWh
LPG: 0.985 p/kg up from the existing rate of 0.96 p/kg
Coal: 1.201 p/kg up from the existing rate of 1.17 p/kg
Latest Defra Papers
The latest versions of Defra papers CCA05 and CCA16 can be downloaded here:
Budget - Extending CCA Eligibility Criteria
In April 2004 the Chancellor announced in his Budget new criteria to become eligible for a Climate Change Agreement and obtain a discount on the Climate Change Levy. The new eligibility criteria is given below. If you think you may be affected by these new rules contact your trade body to see if they are already pursuing this or contact ourselves for assistance (mailto:email@example.com).
New Eligibility Criteria
1 - All businesses in sectors that meet or exceed a 12% threshold of energy-intensity. (Energy costs divided by production value gives energy intensity. Energy costs are all costs associated with the purchase of energy products and electricity. Production value in a given year should represent the market value of work undertaken during that period.)
2 - Businesses in sectors that meet or exceed a 3% threshold but fall below the 12% threshold will be eligible to enter an agreement only if they meet or exceed one of the following two international competitiveness tests:
(a) an import penetration ratio of 50%. This is the percentage ratio of imports to home demand (where home demand is defined as total manufacturers' sales plus imports minus exports); or
(b) an export to production ratio of 30%. This is the percentage ratio of exports to total manufacturers' sales.
Defra Proposals for New CCA Targets
You are probably aware that your CCA Agreement contains a clause that requires a review of targets in 2004 and 2008. Defra have recently issued a Paper, CCA 20, which presents the Defra 'starting point' for the 2004 negotiations. The paper can be downloaded from THIS website by clicking on the "2004 Target Renegotiation - Defra paper CCA20" text on the top right of this page.
The target review will not affect the current Milestone (MS2, October 2003 to September 2004) but it will lead to new targets for the remaining 3 milestones. The negotiations should be completed by September 2004 if everything runs to schedule.
Defra's starting point in the renegotiation is to increase the 3rd , 4th and 5th milestone targets by approximately 5% or by the amount the Sector beat its first milestone target.
Defra are justifying their proposals on the basis that the MS1 performance across all 44 CCA sectors was better than expected (by an average of 5%) and that most sectors have found it easier to make low cost energy savings than they had indicated during the original negotiations in 1999/2000. Defra are also asserting that they "are not aware of operators making significant investment [in energy efficiency]" and they believe much of the original potential for savings still exists.
Defra have indicated that CCA20 is a starting point for negotiations. However, they have stated that if a sector wants a lower increase it will be up to the sector to explain to Defra why 5% is not achievable. Good evidence will be required to present to Defra.
EU Greenhouse Gas Emissions Trading Directive
The EU Greenhouse Gas Emissions Trading Directive will start on 1 st January 2005 . Any site with more than 20MW (aggregated) of installed boiler plant, CHP plant and/or space heating capacity must take part in the scheme.
If, you believe you are not covered by the scheme you do not need to take any further action.
If, however, you believe you have manufacturing sites that may be affected but are not in contact with Defra on this issue (either directly or via other persons within your company) please visit
http://www.defra.gov.uk/environment/climatechange/trading/eu/index.htm for further information.
You are urged to do this ASAP! The deadline for registering your site(s) is 23 October 2003 . The process for issuing Greenhouse Gas Emissions Permits and the allocation of allowances under the UK National Allocation Plan will begin in November 2003 and must be completed early 2004 in time for the submission of the plan to the European Commission by the end of March 2004.
It should be pointed out that the EU ETS scheme rules makes it clear that the responsibility lies with the operator of the installation to apply for a permit. Failure to do so will:
• Leave you in contravention of the EU Emissions Trading Scheme Regulations as you will not have a permit to operate/emit greenhouse gases and thus will be liable to prosecution.
• You will not receive an allocation under the National Allocation Plan and so may be required to purchase allowances equal to your annual carbon dioxide emissions for the years 2005 - 2007 from the market place. For a typical site within the scheme this could result in additional expenditure running into many hundreds of thousands of pounds.
EU Emissions Trading Scheme (EU ETS)
The first results of the work commissioned by DEFRA on the UK National Allocation Plan (NAP) for the EU ETS were released at a seminar on June 16th. Much of the work to date has centred on compiling data to provide the basis for analysing alternative allocation options.
More work is to be done on the design of the National Allocation Plan, which is due to be completed this autumn. If you are a company which is likely to be affected by the EU ETS then it is imperative that you act now to understand the implications of different allocation options and engage in DEFRA’s consultation process. Please click here for further information about the EU ETS.
The 1st Milestone of the Climate Change Agreements (CCA) is now complete. The results were good and the majority of CCA participants are now enjoying a further 2 years of CCL discount. DEFRA were very pleased with the effectiveness of CCAs. In a press release Sustainable Energy Minister Lord Whitty said: "This is good news for business, and good news for the environment. Industry has shown that it is prepared to play its part in the effort to reduce greenhouse gas emissions. The results of our agreements demonstrate real gains in energy efficiency, achieved in a cost-effective way."