Government Initiatives to Boost Competitiveness in Vital UK Sectors and Stimulate Economic Growth

Three hundred UK businesses will gain from the British Industry Supercharger, which features targeted strategies to align energy costs for key industries with those of other leading economies, thereby leveling the playing field for British companies in Europe.

The available support will target sectors particularly affected by high electricity costs, including steel, metals, chemicals, and paper. These industries collectively employ about 400,000 skilled workers throughout the UK and support many more in their supply chains. In 2019, their exports constituted roughly 28% of total UK exports.

Proposed modifications under the Supercharger—set for consultation in Spring—will exempt firms from certain costs associated with renewable energy obligations such as the Feed-in Tariff, Contracts for Difference, and the Renewables Obligation, as well as GB Capacity Market costs, while also examining potential reductions in network charges that industrial users incur for electricity supply.

The measures unveiled by Business and Trade Secretary Kemi Badenoch today (Thursday 23 February) aim to align the energy costs of the UK’s energy-intensive industries with those of the world’s leading economies. This is critical for maintaining the international competitiveness of these businesses and enhancing the UK’s appeal as a destination for global investment, while also removing obstacles to advancing green technology in pursuit of a sustainable net zero future.

Business and Trade Secretary Kemi Badenoch stated:

This is a carefully designed support initiative that ensures strategically important UK industries like steel and chemicals remain competitive globally.

We will support these businesses in growing our economy and providing high-quality jobs and investments in the UK, along with the essential products we rely on daily.

Energy Security Secretary Grant Shapps remarked:

Putin’s manipulation of energy resources has underscored the necessity of secure and affordable energy for all sectors of our economy—especially critical industries like steel and chemicals.

Today’s initiatives aim to deliver the affordable, reliable energy that these industries require to transition to greener practices and secure future jobs.

The details regarding the delivery mechanisms and timelines for the implementation of the British Industry Supercharger will be discussed in the Spring, with an anticipated rollout starting in Spring 2024.

This builds on the Energy Security Strategy released last year, which committed the government to addressing the UK’s industrial electricity prices, notoriously higher than those in comparable nations.

Supporting these companies is vital for the broader economy, as they provide indispensable products that other businesses cannot easily replace, which in turn their supply chains depend on.

It will also play a crucial role in the government’s broader objectives to tap into the potential of emerging green industries like electric vehicle and battery manufacturing, where the UK already excels. These sectors have significant energy needs, and this support will position the UK to capitalize on their growth potential.

Gareth Stace, Director General of UK Steel, commented:

UK industrial electricity prices have lagged behind for many years, and today, the government took an important step toward leveling the playing field for the steel sector. We appreciate this announcement and look forward to collaborating with the government to achieve full price parity with European competitors, as it’s essential to compete equally in the aggressive short-term steel market both in Europe and globally.

Dave Dalton, Chair of the Energy Intensive Users Group, stated:

We welcome today’s announcement regarding measures to lower electricity prices for energy-intensive industries. These steps will align our industrial electricity prices more closely with those in other countries and bolster the competitiveness and decarbonization of UK energy-intensive industries.

The government acknowledges that businesses across all sectors are feeling the pressure of elevated global energy prices. That’s why we announced the Energy Bill Relief Scheme to lower costs, which will continue support from 1 April 2023 to 31 March 2024 via the Energy Bills Discount Scheme (EBDS).

Notes to editors

The government will consult on these initiatives and introduce legislation in due course.

This support enhances the assistance already provided to energy-intensive industries by the government.

In April 2022, the government extended the Energy Intensive Industries Compensation Scheme by an additional three years and more than doubled the budget. This scheme offers businesses relief from the costs associated with the UK Emissions Trading Scheme (ETS) and the Carbon Price Support mechanism included in their electricity bills.

The government’s recent and ongoing efforts to support energy-intensive industries:

Over £2 billion since 2013 has been allocated to EIIs to make electricity costs more competitive. In 2020, this relief amounted to over £122 million in compensation for indirect emissions costs stemming from the emission trading system and carbon price support mechanism, in addition to over £400 million in reduced electricity expenses related to Contracts for Difference, Renewables Obligation, and Feed-In Tariffs.

The UK government announced £315 million in funding during the 2018 Autumn Budget for the Industrial Energy Transformation Fund, available through 2027. This Fund helps high-energy businesses reduce bills and lower carbon emissions. Phase 1 of this program made up to £70 million available across two application cycles, allowing businesses to apply for support in energy efficiency projects and engineering studies focused on energy efficiency and deep decarbonization.

The IETF Phase 2, launched in September 2021, allocated around £220 million in funding for energy efficiency and deep decarbonization projects, as well as feasibility and engineering studies. Phase 2 had four competition windows, with the final closing on 17 February 2023. Through the Energy Bill Relief Scheme, the government has already provided non-domestic energy users, including EIIs, with a support package worth £18 billion, as certified by the OBR during the Autumn Statement.

From April 2023 to March 2024, the new Energy Bills Discount Scheme will offer discounts to all eligible UK businesses and other non-domestic users facing high energy bills, with significantly increased support for businesses in trade-intensive sectors identifiable through the scheme.