Exempting energy intensive industries from the indirect costs of the renewables obligation: consultation analysis

Analysis of information provided by respondents to the consultation where we were seeking views on the eligibility of Energy Intensive Industries to be exempted from indirect costs associated with renewable electricity policies.

1. Background

The Renewables Obligation (RO) is one of the main support mechanisms for renewable electricity projects in the UK. The RO came into effect in 2002, placing an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. A parallel mechanism, The Renewables Obligation (Scotland), exists for Scotland.

In 2017, the Scottish Government and UK Government delivered legislative changes to create a scheme that exempts Energy Intensive Industries (EII) from a proportion of the indirect cost of the Renewable Obligation.

To be eligible for exemption, businesses must pass a sector test and a 20% electrical intensity threshold[1]. In response to criticism that these rules create competitive distortions - by disadvantaging those who are not eligible but who operate in the same sectors as those who are - the UK Government committed to consult on widening eligibility.

Given our devolved responsibility for the Renewables Obligation (Scotland) (ROS), and historical advice to maintain parity with the management of the UK scheme, the Scottish Government published a consultation in parallel.


Email: andrew.mccall@gov.scot

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