Energy Intensive Industries Compensation Scheme
The Energy Intensive Industries (EII) Compensation Scheme is a UK government subsidy scheme to help industries like steel, chemicals, and paper, with high electricity usage to remain competitive. It provides financial relief on high energy prices caused by carbon emissions taxes, namely the UK ETS and Carbon Price Support.
Its purpose has been to prevent "carbon leakage" (businesses moving overseas) and protect against high indirect carbon costs, with high energy intensity industries being eligible, primarily manufacturing sectors such as steel, glass, wood, paper, metal production/casting, plastics, and chemicals.
Companies or businesses must pass a 20% electricity intensity test (so mean electricity costs must be at least 20% of their Gross Value Added) and they must obtain an EII certificate, which is then passed to the electricity supplier. Once eligible key measures of support might include: 100% Exemption from costs associated with Contracts for Difference (CfD), Renewables Obligation (RO), Feed-in Tariffs (FIT), and the Capacity Market., 60% Compensation for network charging costs (grid usage), relief for costs associated with the UK Emissions Trading Scheme (ETS) and Carbon Price Support (CPS).
See Energy Intensive Industries (EIIs): Guidance for applicants seeking a certificate for an exemption from the indirect costs of funding Contracts for Difference (CFD), the Renewables Obligation (RO), the small-scale Feed in Tariff (FIT), and GB Capacity Market (CM) and Form: Compensation for the indirect costs of the UK ETS and the CPS mechanism: guidance for applicants Updated 17 December 2025
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