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Administrative timetable

Request from DBT

10 November 2023: The SAU has accepted a request for a report from DBT for its proposed subsidy scheme, the British Industry Supercharger. This request relates to a Subsidy Scheme of Particular Interest.

The SAU will prepare a report, which will provide an evaluation of DBTs assessment of whether the subsidy scheme complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.

Information about the subsidy provided by DBT

Energy-Intensive Industries (EIIs) are businesses in sectors whose energy costs constitute a significant percentage of their overall operating costs. They play a significant role in the UK economy, employing around 400,000 workers and they have a gross value added of 33.7 billion (1.7% of the UK economy). Their turnover is around 135bn and in 2022 their exports totalled around 33% of total UK exports. They support thousands of additional indirect jobs as part of the wider supply chain, with many providing higher than average wages in moreeconomically vulnerable areas.

Despite existing government support, typical electricity costs for the most energy-intensive industry users in GB are higher than those in other EU countries. This is in part due to differing policy regimes that these countries put in place to protect their EIIs from high electricity prices which, to date, the UK has not matched. High electricity prices result in GB EIIs struggling to remain profitable. This risks significant job losses and disinvestment in foundational industries.

Failure to tackle high electricity prices risks GB losing these critical sectors for good, resulting in the need to place much greater reliance on import markets, sourcing goods from territories with less stringent climate policies which would lead to carbon leakage. This is both a risk to the UKs economic security and efforts to reduce global emissions.

In February 2023, the Government announced its intention to introduce the British Industry Supercharger designed to reduce industrial electricity prices for eligible EIIs and address the risks set out above.

The package of measures comprises:

• increasing the exemption level provided via the existing EII Exemption Scheme on Feed in
• tariffs, Contracts for Difference and the Renewables Obligation from 85% to 100%
• implementing a 100% exemption from the indirect costs of funding Capacity Market Charges
• providing relief on 60% of network charging costs

The government expects electricity costs for eligible EIIs to reduce by on average 24 per MWh by 2025, which would significantly close the price gap that exists with competitor nations. The costs removed from the bills of eligible EIIs will be redistributed to other billpayers, including households and non-eligible businesses and therefore is a transfer and not paid for through general taxation. The impact on non-eligible billpayers is limited to what is necessary to achieve the policy objective while ensuring that bills are not increased by more than 3-5 for households and c.1 per MWh for non-eligible businesses per annum. The measures will exempt eligible businesses from 100% of EII renewable policy costs; 100% of costs associated with the Capacity Market; and compensate them for 60% of their Network Charges costs. We cannot quantify the monetary value of the scheme at business level due to the sensitivity of firm specific data, and what this looks like for each business will vary depending on their electricity usage. Our current indicative estimate suggests the annual value of the scheme in 2025 may be between around 320-410m per annum based on current EII electricity costs.

Government action to supercharge competitiveness in key British industries and grow economy

Information for third parties

If you wish to comment on matters relevant to the SAUs evaluation of the Assessment of Compliance concerning DBTs proposed subsidy to British Industry Supercharger, please send your comments before 5pm on the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit.

Please send your submissions to us at SAU-BIS2023@cma.gov.uk

copying the public authority EIICorrespondence@beis.gov.uk

Please also provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).

Notes to third parties wishing to make a submission

• the SAU will only take your submission into account if it can be shared with DBT. The SAU will send a copy of your submission to DBT together with its report. This is to allow the public authority to take account of the submission in its decision as to whether to grant or modify the subsidy or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with DBT using the email address provided above
• the SAU may use the information you provide in its published report. Therefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance
• for further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit

Contacts

• SAU project team: SAU-BIS2023@cma.gov.uk
• CMA press team: 020 3738 6460 or?press@cma.gov.uk