The Chemical Industries Association (CIA) has negotiated a target of 5% energy efficiency improvement for the UK chemical sector between 2022 and 2030. The agreement marks a 7 percentage point reduction from the 12% target originally proposed by the Government.

 

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Last year the Government confirmed that a new six-year Climate Change Agreement (CCA) scheme would begin on the 1 January 2025, following on from the end of the previous scheme on 31 December 2024. The CCA scheme provides vital relief on the Climate Change Levy (CCL), which all UK businesses must pay on top of their energy bills.

The chemicals sector is a ‘foundation sector’, providing vital inputs to all of the UK’s manufacturing supply chains but it is struggling to attract inward investment in an era of record high energy prices. The extension of the relief provided by the CCA scheme was welcome news.

Even so, the Government’s initial target offer of 12% energy efficiency improvement by 2030, from a baseline year of 2022, was significantly out of line with the data meticulously compiled by chemical sector participants during the target setting exercise. This data showed that a 5% target could be achieved with ambitious efforts.

An unachievable sector target, combined with a proposed increase to the ‘buy-out’ fee paid by sites that miss their target, represented an effective increase to UK industrial energy cost. This runs counter to the Government’s Industrial Strategy, that recognises UK energy cost as a significant barrier to investment and introduces new measures to help tackle high energy prices.

The CIA wrote to the Secretary of State for Energy Security and Net Zero, setting out the detrimental impact this would have on our sector; stressing that jobs, manufacturing capability and tax revenue is at risk under the weight of the UK’s policy-related energy costs. We asked the Minister to use the data provided by participants in good faith, to set an appropriate target.

Working on behalf of our member companies we backed up our asks, supplying supplementary evidence to his officials which shows that the sector is battling to attract investment in the net zero transition, in an economy held back by uncompetitive energy prices.

Following consideration of this evidence, the Department confirmed that the 5% target suggested by the CIA is the right target for the sector and is now only subject to final ministerial approval.

The CIA thanks all those chemical sector CCA participants who were willing and able to support the target setting exercise , stating that their data was vital in pushing back against the initial proposal.

 

How to apply

1. Get in touch with ciabata@cia.org.uk to express your interest

2. Demonstrate that your site is eligible in the chemical sector

3. Become a member of the CIA or CIABATA

4. Ask your energy suppliers to apply your CCL relief to your energy bills