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New UK rules to partly exempt some heavy industries from renewables scheme cost
March 28, 2017 / 1:43 PM / 9 months ago

New UK rules to partly exempt some heavy industries from renewables scheme cost

LONDON (Reuters) - Britain’s government presented new regulations to Parliament on Tuesday which it said will exempt certain heavy industries from some of the costs of a renewable energy support scheme, saving them around 100 million pounds ($125 million) a year.

A worker walks through coils of steel to be used on Tata Steel's new robotic welding line at their Automotive Service Centre in Wednesfield, Britain, February 15, 2017. REUTERS/Darren Staples

The measures will exempt around 130 energy-intensive companies in Britain in sectors such as steel, chemicals, glass and cement, from some of the costs passed on from the government’s Contracts-for-Difference (CfD) scheme which is aimed at spurring investment in low-carbon energy generation.

Businesses with high energy consumption, such as chemicals, steel or cement producers, have long complained about rising costs from Britain’s climate change policies.

Industry body UK Steel said the exemption gives long-term certainty, which helps deliver a more competitive environment for British steel manufacturers, putting them on a more equal footing with their European Union competitors.

“We want the UK to be one of the best places in the world to build and grow a business and that means creating the right conditions for companies to thrive and succeed,” UK energy minister Jesse Norman said in a statement.

CfDs are won through a competitive bidding process which guarantees companies a certain price for the low-carbon electricity they produce for a set number of years.

This should give them support and certainty to attract investment and get projects off the ground.

However, the cost of funding the scheme is recovered through a levy on energy suppliers which is then passed onto domestic and business energy bills.

Although energy costs on average account for 3 percent of UK business expenditure, there are 15 sectors where this reaches 10 percent, the government said in a statement.

Separately, the government is pursuing discussions with the European Union to seek further exemptions from policy costs for energy-intensive industries, it added.

($1 = 0.7963 pounds)

Reporting by Nina Chestney; Editing by Ruth Pitchford and David Evans

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