The government will today (23 February) set out proposals to support key UK industries with their energy costs.
300 businesses across the UK will be eligible for the British Industry Supercharger: targeted measures aimed at bringing UK industry energy costs in line with other major economies around the world.
The support will be made available to sectors particularly exposed to the cost of electricity, such as steel, metals, chemicals and paper. The government estimates these industries employ around 400,000 skilled workers right across the UK and support many more in their supply chains. In 2019 their exports made up around 28% of total UK exports.
Proposed changes under the Supercharger – set to be consulted on in the Spring – will exempt firms from the certain costs arising from renewable energy obligations such as the Feed in Tariff, Contracts for Difference and the Renewables Obligation, as well as GB Capacity Market costs, whilst exploring reductions on network charges, which are the costs industrial users pay for their supply of electricity.
Business and Trade Secretary Kemi Badenoch said: “This is carefully crafted support that will mean strategically-important UK industries like steel and chemicals remain competitive on the world stage. We will back these businesses to keep on growing our economy and delivering high-quality jobs and investment into the UK, as well as the products we rely on for our everyday lives and work.”
Support to start in 2024
The delivery mechanisms and timelines for implementation of the British Industry Supercharger will be consulted on in the Spring, with an expectation that they will be rolled out from Spring 2024 onwards.
Gareth Stace, Director General of UK Steel, said: “UK industrial electricity prices have been uncompetitive for many years, and today, the government took a great step towards levelling the playing field for the steel industry. We welcome this announcement and look forward to working with government to ensure full price parity with European competitors. It is essential we can compete on an equal footing, in the short term, within the fiercely competitive steel market, both in Europe and globally.”
Existing support schemes
The announcement builds on other on-going schemes to support energy intensive industries.
In April 2022 the government extended the Energy Intensive Industries Compensation Scheme by a further 3 years. The scheme provides businesses with relief for the costs of the UK Emissions Trading Scheme (ETS) and Carbon Price Support mechanism in their electricity bills.
In addition, the £315 million Industrial Energy Transformation Fund launched in 2018, with funding available in phases until 2025. The Fund supports businesses with high energy use to cut their bills and reduce carbon emissions. Phase 2 provides up to £70m of grant funding and the competition window closed on 17 February 2023.
For all businesses, support is available in the form of the Energy Bill Relief Scheme, which will be replaced by the Energy Bills Discount Scheme (EBDS) in April 2023. The new EBDS will provide a discount to all eligible UK businesses and other non-domestic users on high energy bills and a substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive, through the scheme.
We will update this news story when more details of the British Industry Supercharger consultation are published.
