UK government plans to cut energy costs for British / Tata steel – by putting up costs for consumers and other businesses

A Tata Steel 16-inch pipe being prepared for offshore installation
A Tata Steel 16-inch pipe being prepared for offshore installation

The UK government has announced plans to cut energy costs for energy-intensive industries (aka Tata Steel)-  by imposing higher fuel bills on consumers and other industries.

A rushed statement from the Dept for Energy (DECC) explains: “While the UK Government is committed to moving to a low-carbon economy and meeting its carbon reduction and renewable energy targets, the indirect cost of supporting renewable electricity deployment measures, such as the Renewables Obligation and Feed-in Tariff, risks certain energy intensive industries being placed at a significant competitive disadvantage where they operate in international markets.

“These industries (aka steel) are often large employers and form a vital part of the UK economy.

“The Government therefore announced that it will provide an exemption for eligible Energy Intensive Industries (EIIs) from the indirect costs of the Renewables Obligation (RO) and Feed-in Tariff (FIT) schemes, to ensure that they have long-term certainty and remain competitive.

“This forms part of a comprehensive package of support for EIIs, which currently includes a compensation scheme for the indirect costs of the RO and FIT.

“However, transitioning from a compensation scheme to an exemption would have a number of benefits for EIIs, notably that support will be faster, more accurate and more certain. Once implemented, the exemption will reduce thlectricity bills of eligible EIIs.

“There will be a consequent increase in the electricity bills of consumers not eligible for the exemption (i.e. households, businesses and non-eligible large energy users).

“The changes are set out in full in the accompanying impact assessment (IA).

“We propose to implement the exemption in relation to the FIT scheme in Great Britain and in relation to the RO in England and Wales.

“The Scottish Government are consulting separately on proposals to implement the exemption in relation to the RO in Scotland. Subject to stakeholders’ views, state aid approval and Parliamentary approval, if we decide to proceed with the proposals we intend to bring them into effect in April 2017.”

To reply to the consultation, you can provide responses at:  

https://econsultation.decc.gov.uk/decc-policy/consultation-on-implementing-anexemption-for-eiis

The consultation closes on 27 May 2016.

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