UK government secures EU compensation for Energy Intensive Industries

UK EIIs have been granted state aid compensation for the cost of renewables, giving the steel sector greater certainty around energy costs.

The UK Energy Intensive Industries (EIIs) have today (17 December 2015) been granted state aid compensation for the cost of renewables, giving the UK steel industry greater certainty around energy costs and saving the sector hundreds of millions of pounds, following concerted EU engagement led by Business Secretary Sajid Javid.

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

Business Secretary Sajid Javid said: "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 ‘5 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, the manufacturers’ organisation, 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, will 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 will be published by the government in January 2016 and payments will be backdated to the date that state aid clearance comes through.

This news on state aid clearance comes as government laid a written ministerial statement (WMS) updating Parliament on the series of steps that have been taken to help the steel industry. Further details can be found in today’s WMS.