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Environmental Chamber decides first appeal on Climate Change Agreements

DATE: 15 Jan 2018

Geo Specialty Chemicals UK Ltd v Environment Agency, Judgment 12 January 2019

The Environmental Chamber of the First-tier Tribunal (part of the General Regulatory Chamber) has given its first decision in relation to Climate Change Agreements (“CCAs”).

The CCAs scheme was first introduced in 2001, and the original scheme ran up to 2013. A new scheme commenced in March 2013, to run to 2020. Under the CCA scheme, companies subject to an obligation to pay Climate Change Levy (a tax on domestic energy bills designed to incentivise energy efficiency) were able to enter into a CCA on a voluntary basis. Pursuant to CCAs, companies which achieve an agreed target reduction in energy usage would receive a further substantial discount in the amount of Climate Change Levy they were due to pay. Since 2013 the CCA scheme has been administered by the Environment Agency.

The Appellant, Geo, entered into a CCA in 2013. Following a change of circumstances in its access to certain forms of energy supply, it sought a variation of its CCA. This was granted in 2015 by way of an amendment to its baseline energy against which compliance with the percentage reduction was to be measured. However, Geo then sought a much more radical change to its CCA on the basis that the change of circumstances rendered it unable to comply with its CCA targets.

The First-Tier Tribunal (Simon Bird QC) dismissed Geo’s appeal, accepting the argument of the Environment Agency both that it had not jurisdiction to hear the appeal against a further discretionary variation of the target, and that in any case the Agency had no power to vary the percentage reduction target, which had been set by the Secretary of State in negotiation with the Appellant itself and its sector association. The FTT decision provides invaluable guidance on the operation of the CCA scheme, accepting that the CCA scheme would have been seriously undermined if participants who were unable to meet their targets because of an unforeseen change of circumstances were able to revisit the terms of their CCAs.

Tim Buley acted for the successful Environment Agency.