Gov secures compensation for energy intensive industries

Posted on 18 Dec 2015 by Callum Bentley

The UK Energy Intensive Industries (EIIs) have been granted state aid compensation for the cost of renewables.

The move – as stated by the Department for Business, Innovation and Skills (BIS) – will give the UK steel industry greater certainty around energy costs and save the sector hundreds of millions of pounds, following concerted EU engagement led by Business Secretary Sajid Javid.

The Prime Minister announced on October 28, 2015 that compensation for EIIs would be paid from the date state aid clearance comes through.

Sajid Javid, Secretary for Business, Innovation and Skills.
Sajid Javid, Secretary for Business, Innovation and Skills.

Approval has now been granted from the European Commission for the UK Government to commence relief in line with initial notification for the most electricity intensive businesses for the costs of renewables policy in their bills.

The news was confirmed personally to Javid by EU Competition Commissioner, Margrethe Vestager in a phone call early yesterday morning.

Javid commented: “This is very welcome news and meets a commitment we made to deliver energy compensation for the steel industry by the end of the year. Relief from energy costs will save our steel industry hundreds of millions of pounds.”

“This comes on top of action we have taken in recent months on procurement, anti-dumping and EU emissions directives, as we do all we can to give our steel industry and workers a more secure and sustainable future.”

Relief for Energy Intensive Industries was one of UK Steel’s ‘five asks’ during the Government’s steel summit earlier this year and following concerted engagement by the Government it has now been granted.

Terry Scuoler, chief executive of EEF, said: “The Business Secretary’s support in driving this deal through the Brussels machinery on behalf of the steel industry is very welcome. It sends a very important signal that the Government is backing steel and will continue to support the industry at this challenging time.”

In the Autumn Statement 2015, the Chancellor went further and announced that EIIs – including the steel industry – would be exempt from the policy costs of the Renewable Obligation and Feed-in Tariffs, to ensure that they have long-term certainty and remain competitive. Compensation will continue to be paid until the exemption is in place.

Guidance is expected to be published by the Government in January, and payments will be backdated to the date that state aid clearance comes through.