- The government announces the British Industry Supercharger: decisive measures to make Britain's strategic energy intensive industries more competitive across Europe
- 300 companies - employing 400,000 skilled workers - in vital sectors including steel, metals, chemicals and paper set to benefit
- Backing proves the UK's determination to secure a competitive future for these industries and long-term resilience of the UK economy for global investment
300 businesses across the UK will benefit from the British Industry Supercharger: targeted measures to ensure the energy costs for key UK industries are in line with other major economies around the world - levelling the playing field for British companies across Europe.
The support will be made available to sectors particularly exposed to the cost of electricity, such as steel, metals, chemicals and paper. 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.
The measures announced by the Business and Trade Secretary Kemi Badenoch today (Thursday 23 February) will bring the energy costs of the UK's energy intensive industries in line with those charged across the world's major economies. This is crucial to helping these businesses remain internationally competitive, and will enhance the UK's attractiveness as a destination for international investment as well as remove barriers to move us further towards greener technology as part of a sustainable net zero future.
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.
Energy Security Secretary Grant Shapps said:
Putin's weaponization of energy has shown how secure and affordable energy is vital to all parts of our economy - especially key sectors like steel and chemicals.
Today's measures will help deliver the affordable, reliable energy that these industries need to become greener, and secure jobs for the future.
The delivery mechanisms and timelines for implementation of the British Industry Supercharger will be consulted on in the Spring, with an expectation that they'll be rolled out from Spring 2024 onwards.
It builds on the Energy Security Strategy, published last year, which committed government to taking action to address the UK's industrial electricity prices, which are higher than those of other comparable countries.
Backing these companies is critically important to the wider economy, as many of them provide products that other businesses cannot easily substitute, and which their supply chains depend upon.
It will also form a key part of the government's wider plans to seize on the potential of new green industries like electric vehicle and battery manufacturing, where the UK is already a pioneer. These businesses have high energy requirements, and this support will mean the UK is well-placed to seize on the potential for these industries to grow.
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.
Dave Dalton, the chair of the Energy Intensive Users Group, said:
We welcome today's announcement with the measures to reduce electricity prices for energy intensive industries. These measures will bring our industrial electricity prices more in line with those in other countries and help the competitiveness and decarbonisation of energy intensive industries in the UK.
The government recognises that businesses of all kinds are feeling the impact of high global energy prices, which is why we announced the Energy Bill Relief Scheme to bring down costs, and will continue support from 1 April 2023 until 31 March 2024 through the Energy Bills Discount Scheme (EBDS).
Notes
The government will consult on these measures and bring forward legislation in due course.
This support builds on the backing already offered to energy intensive industries by government.
In April 2022 the government extended the Energy Intensive Industries Compensation Scheme by a further 3 years, and more than doubled the budget. 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.
The government's recent and on-going work to support energy intensive industries:
More than £2 billion since 2013 to EIIs to make electricity costs more competitive. In 2020 this relief was worth over £122 million in compensation for the indirect emissions cost due to the emission trading system and carbon price support mechanism and over £400 million in reduced electricity costs associated with funding Contracts for Difference, Renewables Obligation and Feed In Tariffs.
The UK government announced £315 million of funding in the 2018 Autumn Budget for the Industrial Energy Transformation Fund, with the funding available over the period to 2025. The Fund supports businesses with high energy use to cut their bills and reduce carbon emissions. Phase 1 of the programme made up to £70 million available over two separate application windows and businesses were able to apply for support with energy efficiency deployment projects and energy efficiency and deep decarbonisation engineering studies.
IETF Phase 2 launched on Wednesday 22 September 2021, with around £220 million of funding, to be invested in the above projects but will also support the deployment of 'deep decarbonisation' projects. The first Phase 2: Autumn 2021 competition window is open now and runs from 27 September to 6 December with up to £60 million of funding available to businesses in England, Wales and Northern Ireland. The government have already provided through the Energy Bill Relief Scheme a package of support for non-domestic energy users including EIIs through this winter worth £18 billion per the figures certified by the OBR at the Autumn Statement.
From April 2023 to March 2024, the new Energy Bills Discount Scheme 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.
