Electricity: Iron and Steel

Department for Business, Energy and Industrial Strategy written question – answered on 10th January 2019.

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Photo of Jessica Morden Jessica Morden Opposition Whip (Commons), Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee)

To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of the disparity in industrial electricity prices for steel producers in the UK and those in France and Germany.

Photo of Claire Perry Claire Perry The Minister of State, Department for Business, Energy and Industrial Strategy, Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth)

A 2017 report prepared for the Committee on Climate Change on the competitiveness of UK energy intensive industries (EIIs) estimated that average industrial electricity prices faced by steel producers in the UK were around double those in France and Germany in 2016[1]. Since 2016 the UK has introduced an exemption for eligible EIIs from the costs of the Contracts for Difference scheme, helping to reduce the differential.

The Government recognises that industrial electricity prices are currently higher than those in some competitor economies and is committed to minimising energy costs for businesses to ensure our economy remains strong and competitive. The ability of our industries to be able to compete across Europe and globally is a priority for this Government.

The Budget on 29 October 2018 announced that £315 million is being provided for an Industrial Energy Transformation Fund to support industrial energy efficiency and decarbonisation projects to bring energy costs down for vital industries, including the steel sector.

We also continue to reduce the cumulative impact of energy and climate change policies on industrial electricity prices for key energy intensive industries. This includes a package of relief for these industries worth over £850 million since 2013, of which more than £270 million has been provided to the steel sector.

[1]Figure 2.8, Competitiveness impacts on energy-intensive industries Cambridge Econometrics March 2017: https://www.theccc.org.uk/wp-content/uploads/2017/04/Competitiveness-impacts-on-energy-intensive-industries-Cambridge-Econometrics-March-2017.pdf

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