Explanatory note

These Regulations extend the scheme providing for a reduced rate of Climate Change Levy until 31st March 2025. Part IV of Schedule 6 to the Finance Act 2000 makes provision for a reduced rate of Climate Change Levy to be charged if a facility which receives supplies of energy is certified as being covered by a Climate Change Agreement for a certification period.

Regulation 2 amends the Climate Change Agreements (Administration) Regulations 2012 (S.I. 2012/1976) to provide for a new target period from 1st January 2021 to 31st December 2022. During a target period, a facility must meet targets for energy use or emissions which are specified in a Climate Change Agreement in order to be eligible for a reduced rate of Climate Change Levy. If a facility does not meet any target for a target period, it may pay a buy-out fee on each tonne of carbon dioxide equivalent by which it falls short of meeting that target. If a facility overachieves against a target, there will be a surplus, being the amount by which the reduction in emissions has exceeded the target.

Regulation 2 also amends the terms to be included in an underlying agreement relating to the buy-out fee, and amends the formulas to provide that any surplus will not be taken into account in calculating the buy-out fee for the new target period. Amendments to the financial penalty provisions include a new definition of “base year” and link the calculation of a financial penalty to the relevant target period.

Regulation 2 also inserts a power for the administrator to vary a climate change agreement to take account of any changes in the terms specified by that statutory instrument from time to time as terms which must be included in agreements.

Regulation 3 amends the Climate Change Agreements (Eligible Facilities) Regulations 2012 (S.I. 2012/2999) to extend the scheme until 31st March 2025.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sectors is foreseen.