Britain’s energy-intensive industries are calling on the government to tackle soaring energy costs, warning that high electricity prices, policy uncertainty and carbon leakage risks are making UK investment uncompetitive.
In an open letter to Business and Trade Minister Sarah Jones, industry leaders from sectors including steel, chemicals, glass and refining, urged the government to step up support to prevent further deindustrialisation.
Energy Costs and Policy Risks
The letter highlights that UK industrial electricity prices remain higher than in Europe, the US and Asia, despite existing relief measures. To level the playing field, businesses are calling for an increase in network charge compensation from 60% to 90%, bringing the UK closer to European rivals.
Gas-intensive industries also face growing uncertainty, with concerns that new levies or a shift of existing ones from electricity to gas could harm competitiveness. The sector is demanding assurances that any policy changes will include exemptions similar to those for electricity-intensive industries.
Decarbonisation and Grid Access
While the government’s push for carbon capture, hydrogen and electrification is welcome, firms warn that a lack of clear long-term funding is preventing private investment. The cancellation of the second Industrial Energy Transformation Fund (IETF) competition was a setback, and businesses are calling for urgent clarity on future support.
They also want industrial decarbonisation projects to be prioritised for grid connections, arguing that the government’s current fast-track plans focus solely on low-carbon electricity generation.
Carbon Border Measures
Industry leaders back the UK’s planned Carbon Border Adjustment Mechanism (CBAM) but warn that a 12-month gap before it takes effect in 2027 could see high-carbon imports flood the UK. They urge the government to bring forward mitigation measures and provide clarity on export protections to prevent British firms from losing out.
The letter concludes with a call for urgent discussions with ministers to address these challenges and ensure Britain’s energy-intensive industries remain competitive.
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