Energy Intensive Industries compensation scheme extended, plus support for EV battery manufacturers

High energy usage businesses, such as steel and paper manufacturers, are set to receive further support for rising electricity costs as the government extends the Energy Intensive Industries (EII) compensation scheme.

The scheme will continue for a further three years and its budget will be more than doubled. The government is seeking to ensure the UK remains an attractive investment destination for energy intensive industries, whilst encouraging greater electrification to help decarbonise industry.

The EII Compensation Scheme provides businesses with relief for the costs of the UK Emissions Trading Scheme (ETS) and Carbon Price Support mechanism in their electricity bills, recognising that UK industrial electricity prices are higher than those of other countries.

Scheme opens to EV battery manufacturers

The scheme will now also provide support for companies that manufacture batteries for electric vehicles, in a bid to support the UK’s drive to capitalise on the global shift to greener technologies.

Industry Minister Lee Rowley said, “We want to keep the UK at the forefront of manufacturing, helping our energy intensive industries remain competitive and sustainable for the long term, and continuing to power our economy with thousands of jobs across the country. We are not only extending our support through the compensation scheme, by offering a greater level of compensation to eligible firms, we are delivering more relief from electricity costs for these industries.”

The government said it will also consider further measures to support business including increasing the renewable obligation exemption to 100%. Further details will be announced in the coming weeks. This is in addition to existing support through the £315 million Industrial Energy Transformation Fund to help heavy industry cut bills and reduce emissions.