The UK government is considering exempting energy-intensive industry from having to contribute toward the costs of the nation's renewables subsidy schemes.
Businesses such as steelmakers, paper mills, glass, ceramics, and cement companies are already exempt from up to 85% of the costs passed onto all commercial entities to fund national programs such as the contracts-for-difference and Renewables Obligation schemes, which incentivize clean power generation. The Energy Intensive Industries Exemption Scheme, which provides those reductions, was extended for three years in April. It had its budget doubled and now the government's Department for Business, Energy and Industrial Strategy (BEIS) is discussing whether such companies should be exempt entirely from the “green levy.”
The consultation exercise opened last week and will close on Sept. 16.
BEIS said the green levy applied to electricity generators has helped to make UK electricity prices more expensive than power generated in Europe. The higher cost could drive businesses away from the United Kingdom, deter companies such as steelmakers from electrifying fossil fuel-driven operations, and see consumers instead buy higher-carbon intensive products from parts of the world with more lax climate change policies, according to BEIS.
With the UK's next prime minister due to be announced on Sept. 5, favorite Liz Truss told The Spectator magazine in July she would introduce a “temporary moratorium on the green energy levy to enable businesses and industry to thrive while looking at the best way of delivering net zero,” rendering the current consultation moot. Rival Rishi Sunak has promised to demerge energy from BEIS into a standalone government department again.
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