UK cement and lime producers excluded from compensation scheme

The Mineral Products Association (MPA) has expressed disappointment that UK cement and lime producers have been excluded from the government’s compensation scheme for climate change costs. Under the scheme, some energy-intensive industries can apply for compensation from the indirect costs of the UK Emissions Trading Scheme (UK ETS) and Carbon Price Support (CPS) if they meet the criteria. According to the MPA, by excluding cement and lime, “the government has missed an opportunity to support two essential industries during the current energy crisis.”
 
In the 2021 consultation on the compensation scheme, energy intensive industries needed to meet at least one of three tests to qualify. However, the Department for Business, Energy & Industrial Strategy (BEIS) has since changed this to require that industry sectors meets all three tests. The thresholds of the tests have also changed, increasing two out of the three but lowering the ‘Indirect Emission Intensity’. This change in the test criteria means that both cement and lime sectors will be excluded from receiving compensation. 
 
“The impact of the decision is that these industries will continue to face energy costs millions of pounds higher than competitors in the EU as a result of paying the pass-through cost of the unilateral CPS as well as ETS costs. That places UK cement and lime producers at a competitive disadvantage in international markets. In turn this makes the UK a less attractive place for overseas investment, and in the long run risks pushing the industry into an uncompetitive position, contrary to the government’s own stated ambitions,” says the MPA. 
 
“Reaching net zero and delivering our economic potential requires huge investment from global businesses and it becomes harder to make the case for the UK as a location for such investment if policy costs make operating in the UK uncompetitive,” added Dr Diana Casey, director for energy and climate change, MPA.