Energy intensive businesses will receive assistance to offset the cost of energy policy on their electricity bills under plans published late yesterday by Business and Energy Minister Michael Fallon.
Proposals to exempt the most electricity intensive industries from a proportion of the costs of Contracts for Difference will be subject to consultation. The move will “level the playing field” so that British businesses are not made uncompetitive due to the costs of this policy.
Contracts for Difference have been introduced to support investment in low carbon electricity generation. They are a significant element of Electricity Market Reform (EMR) and aim to stimulate investment by providing a stable long-term price for low carbon electricity.
“As we reform the market to attract new investment into our energy infrastructure, it is vital that we do not undermine the competitiveness of UK industry,” said Business and Energy Minister Michael Fallon.
“Energy intensive manufacturing is central to strengthening our industrial base and rebalancing our economy. These industries are significant employers and play an important role in the low carbon economy through the products they manufacture.”
The exemption from the costs of Contracts for Difference is part of a government package to support the most intensive electricity industries. This consultation sets out what the exemption might look like, and seeks views on eligibility criteria.
The recommended option is to use the same eligibility criteria as the EU Emissions Trading System and Carbon Price Support indirect costs compensation. This would exempt industries with a total combined value to the UK of approximately £50 billion in turnover, employing 150,000 people. Some of these industries would include: steel, copper, aluminium, lead, zinc, tin, chemicals, fertilisers and paper.
Industry and other interested parties are encouraged to comment on the proposals.
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