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Materials producers need more than Hunt’s quick fix

Materials producers need more than Hunt’s quick fix

Mineral products are energy intensive

The Treasury has published details of its new energy bills discount scheme for businesses and the public sector, extending the energy bill relief scheme that expires in March.

From 1st April 2023 to 31st March 2024, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill, except for those benefitting from lower energy prices.

A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries. Businesses in scope will receive a gas and electricity bill discount based on a supported price which will be capped by a maximum unit discount of £40.0/MWh for gas and £89.1/MWh for electricity.

Chancellor of the Exchequer Jeremy Hunt said: “My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.

“Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine. But to provide reassurance against the risk of prices rising again we are launching the new energy bills discount scheme, giving businesses the certainty they need to plan ahead.”

The Mineral Products Association broadly welcomed the new energy bill discount scheme (EBDS) but said that its members needed more than just a quick fix. It said that the proposed support may not be sufficient to maintain the competitiveness of UK manufacturing should prices return to the high volatility seen over the last 12 months.

Support available through the EBDS encompasses most of the products manufactured by MPA member including aggregatesasphalt, cement, concrete and industrial minerals.

For energy intensive mineral products like cement and lime, tackling high energy prices is critical, MPA said, as these sectors compete in international markets.

However, while energy prices are expected to remain high for the foreseeable future, the EBDS is only relatively short term and could leave the mineral products industry exposed if price fluctuations continue. A longer-term solution, through delivery of the commitments set out in Britain’s energy security strategy, is required to properly address high UK energy costs, the MPA said.

MPA chief executive Jon Prichard said: “The announcement of ongoing government support is welcome, but there is still a risk that in the event of highly volatile prices, MPA members could remain exposed to high energy costs. As such, this support package provides only a partial, short-term fix. We call on the government to deliver the electricity market reforms promised in the British energy security strategy as a matter of priority. Electrification is a key driver to decarbonise UK industry and the transition to net zero will rely on long-term secure supplies of competitively priced electricity. MPA believes that fundamental electricity market reform is the only way to ensure this is achieved.”

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Greg Aftayev

Greg Aftayev is a Journalist at Flaunt Weekly Covering Tech News.

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