COLDSTORE operators can now claim an 80% reduction on the Climate Change Levy in return for meeting energy or carbon saving targets under a new Climate Change Agreement.
Originally, CCAs were only available to companies that undertook IPPC Part A processes. This included a range of sectors including food processing. Temperature-controlled storage was excluded, in the main, as it was not subject to IPPC. However, a number of stores were included as they are physically located on food production sites.

In late 2005, it was announced that industry sectors that could prove an average energy intensity (EI) level of more than 10% would be eligible to negotiate for a CCA. EI is the cost of energy expressed as percentage of turnover.

On this basis, the Cold Storage and Distribution Federation (CSDF) carried out an intensive energy survey of storage sites that resulted in an average EI of over 12% being identified. As a result, the sector has now gained Treasury approval for a CCA that will come into being later this year.

A CCA will provide an 80% reduction on the CCL (Climate Change Levy) currently paid. This relates to a saving of 0.344p/kWh on the current CCL rate of 0.43p/kWh. The following are examples of site savings;

• Energy consumption of 25,000,000kW/h gives a saving of some £90,000 per year

• Energy consumption of 10,000,000kW/h gives a saving of more than £34,000 per year

• Energy consumption of 3,000,000kW/h gives a saving of more than £10,000 per year. However, in return for the CCL reduction, users will be required to achieve savings in their energy consumption.

12% improvement

The energy savings target that the CSDF has negotiated with DEFRA is a 12% improvement by 2010 compared to a base year performance in 2005. There is also an intermediate target of a 5% improvement by 2008.

If meeting a target proves a problem, CCA commitments can be met by purchasing CO2 Allowances in the UK Emissions Trading Scheme. This, says the CSDF, is usually a very cost effective option to secure the CCL discount.

Once an operator/user has signed up for a CCA, the site(s) will be entitled to receive the CCL discount for two and a half years until 31st March 2009. If the intermediate 5% target is passed either by saving energy or buying CO2 allowances, a further two years of CCL discount until March 2011 will be allowed.

If the 12% target is passed, a further two years of CCA discount until March 2013 will be allowed.

If either of the targets are not met, it is not necessary to pay back any of the discount already received.

Definition

The formal definition of the sector is “stand-alone permanent storage buildings for controlling the inside temperature of the storage area below ambient temperature, where temperature controlled storage is the predominant activity of the facility. Also, permanent machinery to cool or freeze products prior to storage or to produce ice, where this is the predominant activity of the facility or where the activity is done in conjunction with the temperature controlled storage”. As can be appreciated from the above, small cold rooms within a building are not covered or small ice making machines are not covered. However, chill and frozen storage within regional distribution centres and other similar facilities are covered by the definition.

Cost

There will be a one-off joining fee, which will be non-refundable, as well as an annual fee, both levied on a per site basis.

Fees have been structured on the basis of small, medium and large sites. This has been done to spread the burden of administrative costs fairly between different sizes of site and reflects the significantly higher level of Climate Change Levy discount that larger sites will obtain. Different fee levels also apply to members and non-members of the CSDF.

For more details call CSDF on 0118 988 4468