Draft Climate Change Agreements (Administration, Energy-intensive Installations and Eligible Facilities) (Amendment and Revocation) Regulations 2026

James Wild Excerpts

Tuesday 23rd June 2026 General Committees

[James Wild (North West Norfolk) (Con)]

It is a pleasure to see you in the Chair, Mr Wishart, presiding over our proceedings. Given the origin of this measure, with the policy work that underpins it having begun under the previous Government, we will not oppose it, but as the Minister may expect, I have a few questions for him.

The climate change agreements allow eligible facilities to reduce their energy use and, in exchange, pay reduced rates of the climate change levy. The discounts can be significant—up to 92% on electricity. The regulations make three changes: they expand the scheme to include the three new processes the Minister referred to, they consolidate the existing eligibility rules and they correct a numerical error in the formula used to calculate buy-out fees.

The consultation that preceded the changes was launched in November 2023 and closed in February 2024. Applications were made for the inclusion of seven processes, and in October the Government announced that the production of automative-grade battery cells, the packaging of spirits and the mechanical recycling of plastics were all to be included. The changes do not take effect until January 2027, over three years after the consultation opened—a lengthy process, as I am sure you will agree, Mr Wishart—and the response to the consultation highlighted that more time was needed. Will the Minister explain why the process has been so lengthy?

As I mentioned, applications were made for the inclusion of seven processes, and three were selected. I have looked into it but was unable to find the information, so perhaps the Minister can tell us what the other processes were and explain the basis on which they were rejected. I would also be interested to know whether there is the potential for those sectors to be given further opportunities to apply.

I will not dwell on the buy-out fee correction, because the adjustment goes to four decimal places. I am not sure that will have a substantial impact, but I would be grateful for the Minister’s reassurance on that.

I have previously welcomed the Government’s decision to extend the climate change agreements scheme for a further six years. When businesses are facing headwinds, the extension offers much-needed respite. Nevertheless, as all Members will know, British manufacturers pay considerably more for energy than their competitors. Compared with the EU, UK firms pay 50% more, and the gap between the UK and America is much larger.

Excessive energy costs are undermining our growth and productivity prospects, yet in the most recent Finance Act, the Government raised the climate change levy rate, at a cost to business of £2 billion a year. That is a significant burden on businesses that are already struggling. We need cheaper energy, which is what the Conservative’s cheaper energy plan would deliver.

We welcome the lightening of the load on businesses, and we support the agreements, but the Government should stop adding levies and costs to the energy bills of companies and individuals, and instead look to remove them. We will not oppose the statutory instrument, but I look forward to hearing the Minister’s answers to my questions.