Details of compensation for energy intensive companies is published

Posted on 20 May 2013

The Government has provided energy-intensive companies with guidance to claim compensation to offset the cost of energy policy in their electricity bills.

The guidance is being published alongside the government response to its consultation on a £250 million Energy Intensive Industries Package.

Eligible firms will be able to apply from June 3 as part of measures to reduce the impact of energy and climate change policies on the cost of electricity for energy intensive industries in the UK.

The guidance explains how businesses can claim compensation from the first tranche of the £250 million indirect costs of the EU Emissions Trading System (EU ETS). Up to £113 million has been allocated for this scheme.

Business and Energy Minister Michael Fallon said: “It is essential that as we put in place policies to generate the necessary investment in energy infrastructure we do not undermine the competitiveness of UK industry.

“This compensation package will support firms, protect jobs and help reduce the risk of industries leaving our shores.
He added “Energy intensive industries also provide many of the components for low carbon goods. For example, steel is vital for the manufacture of wind turbines”.

The government says it will also establish a compensation scheme to address the indirect costs of the Carbon Price Support mechanism, subject to state aid clearance. That scheme is currently being considered by the European Commission and will be announced later this year.

The compensation schemes were proposed under previous energy minister Charles Hendry in 2012 in response to the reaction of several energy-intensive firms to the carbon price floor, which for some companies represented a fourth round of green tax or carbon penalty on top of EU ETS and the Carbon Reduction Commitment. Several multinational companies threatened to remove manufacturing operations from the UK unless the price floor was amended or they were compensated.

Applications for the EU ETS scheme can be submitted from June 3, 2013, when the form will be made available on the website.

The deadline for applications for compensation which includes costs incurred from the 1 January 2013 will be the end of July. Applications received after the end of July will not be considered for costs already incurred.