Leaders of Britain’s big industrial consumers of power and gas today gave two cheers to the government’s moves to protect them from rocketing energy costs.

Trade body the Energy Intensive Users Group offered tepid approval to Whitehall’s measures intended to shield activities such as steel-, chemicals- and paper-making from rising costs of energy in the enduring global crisis.

After consultations, D-BEIS has agreed to compensate big firms for their indirect emissions until 2025 at least, and at a level pegged to 1.5% of any manufacturer’s gross value added (GVA).

That pleases the EIUG, as far as it goes.   But the body immediately pointed out that significant numbers of energy-hungry industries would not qualify.

Uncompensated exceptions continue to include companies “at risk of carbon leakage due to indirect emission cost in industrial electricity prices”, the EIUG noted.

Rival manufacturers in continental Europe also benefit too from intrinsically cheaper power, it added.

Unlike British domestic use, retail tariffs for power sold to industrial and commercial users are not pegged back by any retail price cap.

Gas for furnaces and industrial processes are where the EIUG seeks the government’s urgent interventions.

The UK Emission Trading System (ETS) and the carbon price support mechanism – GB’s unilateral carbon tax – are at the heart of the dispute, or so the EIUG believes.

The 60% uptick in Britain’s ETS carbon price since trading began last year, plus even steeper rises due soon – way beyond pre-ETS expectations – , will increase cost of indirect emissions yet more, increasing big firm’s risk of carbon leakage.   New rules since June mean it’s become harder too for firms to qualify for compensation.

EIUG director Arjan Geveke called on D-BEIS to publish its analysis on which types of companies ought to qualify for IEU compensation.

He sought to the ministry’s reasons for upping eligibility thresholds set out in the consultation and, if necessary, he requested that Whitehall prolong the period of eligibility.



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