Explanatory note

These Regulations revoke the Climate Change Agreements (Eligible Facilities) Regulations 2001 (“the 2001 Regulations”), the Climate Change Agreements (Eligible Facilities) Regulations 2006 (“the 2006 Regulations”), the Climate Change Agreements (Eligible Facilities) (Amendment) Regulations 2006 and the Climate Change Agreements (Eligible Facilities) (Amendment) Regulations 2009 and replaces them with a consolidated and amended set of Regulations. The two significant amendments are the 90% rule which changes to 70% and the removal of the energy intensive criteria.

The Regulations apply to installations set out in Table A to paragraph 51 of Schedule 6 to the Finance Act 2000 (c. 17) and other installations carrying out an eligible process as defined by the Schedule to the Regulations. The Schedule incorporates the eligible processes set out in the Schedule to the 2006 Regulations (as amended).

Regulation 1(3) provides that regulations 3 to 8 are to cease to have effect at the end of 31st March 2023.

Regulation 3(1) defines what is an eligible facility for the purposes of entering into a climate change agreement. During a 12 month period at least 70% of the reckonable energy supplied to the facility will be used within an installation. Regulation 3(2) sets out how to calculate the estimated supply or use of reckonable energy by reference to the previous 12 month period.

Regulation 5 sets out how to calculate reckonable energy.

Regulation 6 sets out how reckonable energy is calculated in respect of a dedicated electricity generation plant.

Regulation 7 sets out how reckonable energy is calculated in respect of a combined heat and power station.

Regulation 8 sets out how reckonable energy is calculated in respect of steam.

Regulation 9 provides that the 2001 Regulations and the 2006 Regulations (as amended) remain in force in respect of climate change agreements entered into by the Secretary of State before these Regulations come into force.

Regulation 10 requires the Secretary of State to review the operation and effect of regulations 3 to 8 and publish a report within five years after the Regulations come into force. Following the review it will fall to the Secretary of State to consider whether the Regulations should be allowed to expire as regulation 1(3) provides, be revoked early, or continue in force with or without amendment. A further instrument would be needed to continue the Regulations in force with or without amendments or to revoke them early.

A full impact assessment of the costs and benefits of this instrument is available from the Department of Energy and Climate Change’s Heat and Industry Division (telephone 0300 060 4000), and is published alongside the instrument and its Explanatory Memorandum on the legislation website of The National Archives (http://www.legislation.gov.uk).