UK government mulls further energy-intensive industry support

The UK government says it is considering further relief for energy-intensive industries, such as steel, under new proposals to help subsidise their electricity costs.

The government is consulting on the option to increase the level of exemption for certain environmental and policy costs from 85% of costs up to 100%.

“This reflects higher UK industrial electricity prices than those of other countries including in Europe, which could hamper investment, competition and commercial viability for hundreds of businesses in industries including steel, paper, glass, ceramics, and cement, and risk them relocating from the UK,” the government says in a note.

“The publication of this consultation is a significant step forward in delivering competitive electricity prices for the UK steel sector and should provide some much-needed relief in the face of extremely challenging circumstances at the current time,” says UK Steel director general Gareth Stace. “While there remain difficulties, this announcement demonstrates that UK government understands the challenges of British industry and continues to support steelmakers and steel communities across the country.”

This is a consultation on a targeted support scheme for energy intensive industries, as announced in April in the government’s Energy Security Strategy. Launching this consultation now provides the future government with the option to introduce this scheme given current high electricity prices, the government says.

The separate EII Exemption Scheme meanwhile allows big energy users to claim an exemption of up to 85% of their Contract of Differences (CoD) and Renewables Obligation (RO) costs. The government said in April it would extend for three years the EII compensation scheme and increase its aid intensity to up to 100%, or 1.5% of GVA (see Kallanish passim).

Adam Smith Poland