Energy Intensive Industries (EII) Schemes

There are two important schemes that can financially benefit your businesses if you qualify as an energy-intensive firm. Here we outline the two schemes, outline who qualifies and discuss how your business take can part.

EII compensation

To improve the competitiveness of the UK’s most energy-intensive businesses, the government has implemented the Energy Intensive Industries scheme to mitigate the impact of the EU and UK carbon trading schemes. Through this scheme, eligible businesses can apply for compensation for a proportion of the costs of their energy bills.

The carbon trading scheme is used to incentivise businesses to reduce their consumption – if they don’t, they must buy more carbon credits. This raises the overall price of electricity, which disproportionately affects any business which uses a lot of energy.

Specifically, this scheme entitles applicants to “compensation for the indirect costs of the UK ETS and the CPS mechanism: guidance for applicants”.
Applicants receive quarterly compensation payments direct from the government.

Who qualifies for EII compensation?

The EII compensation scheme focuses on the most ‘at risk’ sectors in the UK. Qualifying businesses need to demonstrate that their business is ‘energy-intensive’. To do this the government uses a filter test, which requires businesses to spend a percentage of their ‘GVA’ (a sum of EBITDA and wages) on electricity. Businesses passing this test classify as ‘energy-intensive’ for the purposes of the scheme.

Qualifying manufacturing industries include:

• Textiles
• Wood
• Pulp & Paper
• Glass fibres
• Fertilisers
• Chemicals
• Iron
• Steel
• Aluminium
• Lead
• Zinc
• Tin
• Copper
• Battery production

To improve the competitiveness of the UK’s most energy intensive businesses, the government has implemented the Energy Intensive Industries scheme to mitigate the impact of renewables policies. Through this scheme, eligible businesses can apply for compensation for a proportion of the costs of their energy bills.

This scheme entitles applicants to an “exemption from the indirect costs of funding Contracts for Difference (CFD), the Renewables Obligation (RO) and the small-scale Feed in Tariff (FIT)”.

Applicants receive a certificate giving them a discount on bills moving forward of up to 85% of the costs of these three elements.

The scheme focuses on primary and secondary industrial sectors, including the manufacturing, engineering, mining, and quarrying sectors.