Recommendation 26

HM Government Not Addressed

43. We recognise this is a worrying time for businesses facing pressures due to the significant increases in global gas prices, and the subsequent increases in electricity prices. Extensive engagement with industry continues across Government at both a ministerial and official level. 44. We are determined to secure a competitive future for our energy intensive industries and in recent years have provided them with extensive support, including more than £2 billion to help with the costs of electricity and to protect jobs, including over £600 million in relief for electricity costs to the steel sector since 2013. 45. Funding for the indirect costs of the carbon pricing relief scheme has been secured to extend the schemes for a further year to cover financial year 2021/22 as part of the Government’s 2020 Spending Review. 46. We held a consultation on the future of the Energy Intensive Industries (EII) compensation schemes for the indirect emission cost due to the UK Emissions Trading Scheme (ETS) and carbon price support mechanism which closed on 9 August and officials are now analysing responses. 47. We have also introduced a metallurgical exemption from the climate change levy. France and Germany have taken similar steps. Our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to further reduce our reliance on fossil fuels. 48. A key factor in our energy costs being higher than European competitors is our energy mix. Our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown, low carbon energy sector to further reduce our reliance on fossil fuels. 49. In addition to the measures above, the Government has also established various funds to support businesses with high energy use to cut their bills and reduce their carbon emissions, including the £315 million Industrial Energy Transformation Fund. The first round of winners for Phase 1 included Celsa Steel, winning a £3 million grant to improve energy efficiency. 50. Ofgem have published their research on electricity prices for energy intensive industries in the UK, including network costs (www.ofgem.gov.uk/publications/research- gb-electricity-prices-energy-intensive-industries). This work contributed to HMT’s Net Zero Review. The Review’s final report was published in October 2021 and focused on the potential exposure of households and sectors to the transition. 51. Ofgem, as the energy market regulator, is independent from Government and decisions on network charges, such as the Target Charging Review, are for it to make. Ofgem operates in a statutory framework set by Parliament.