BEIS extends compensation scheme for energy intensive industries

Plans to extend the Energy Intensive Industries Compensation Scheme to 2025 and more than double its budget have been confirmed the government.

The scheme, which is designed to prevent the offshoring of emissions to other countries with lower carbon costs, helps businesses with high energy usage such as steel and paper manufacturers to cover indirect costs from the UK Emissions Trading Scheme and the Carbon Price Support mechanism.

Responding to a consultation issued last summer, the Department for Business, Energy and Industrial Strategy said the compensation scheme will be extended for a further three years to 31 March 2025, with payments backdated to 1 April 2022, whilst its budget will be more than doubled.

Furthermore, the scheme will now also be extended to provide support for companies that manufacture batteries for electric vehicles.

Industry minister Lee Rowley said: “We want to keep the UK at the forefront of manufacturing, helping our energy intensive industries remain competitive and sustainable for the long term, and continuing to power our economy with thousands of jobs across the country.

“We are not only extending our support through the compensation scheme, by offering a greater level of compensation to eligible firms, we are delivering more relief from electricity costs for these industries.”

Investment Minister Lord Grimstone added: “For the first time we are including battery manufacturers in our electricity bill compensation scheme for energy intensive industries to help keep the UK at the forefront of this growing industry.

“By doing so, we are ensuring the UK continues to attract investment across the country, supporting jobs and building the batteries that will power our automotive industry for decades to come.”

Following its decision, BEIS said it will also consider further measures to help energy intensive industries such as increasing the exemption businesses enjoy from the Renewables Obligation to 100%.