Devolved aspects of the review of the Scheme that provides relief to energy-intensive industries for a proportion of the costs of funding renewable energy generation, that includes the Renewables Obligation (Scotland)

Overview

This consultation enables the Scottish Government to fulfil its obligation, in parallel with the UK Government which is seeking views on the exemption scheme that provides relief to energy-intensive industries (EII) for a proportion of the indirect costs of funding renewable electricity policies.  This includes Contracts for Difference (CfD), Renewables Obligation (RO) and small-scale Feed-in Tariffs (FIT) schemes (collectively defined as the “Exemption Scheme” or “Scheme”).

Given our devolved responsibility for the Renewables Obligation Scotland, the Scottish Government is seeking views on the possible impacts of a parallel proposal.

The Renewable Obligation (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 (ROS), exists for Scotland.  In 2017, the UK Government and Scottish Government delivered legislative changes to create a scheme that exempts Energy Intensive Industries from a proportion of the indirect cost of the RO and ROS. To mitigate risks of carbon leakage, the Exemption Scheme reduces the indirect cost of funding renewable policies and their related levies and obligations for certain EIIs.

Read the consultation paper.

Why your views matter

The Scottish Government is seeking feedback and evidence to consider whether there is a rationale for increased measures to mitigate the increased costs of electricity due to renewable electricity policies and whether existing measures need to be amended.

In particular, we seek to better understand:

• The benefits of the scheme on EII
• Whether a five year baseline is relevant to reflect the impact of the Covid pandemic to businesses.
• If the parameters for accepting applications from businesses should change
• Whether the subsidy intensity level is sufficient and if not, what level would be appropriate
• Whether the implementation and notification periods are agreeable should any changes be made to the EII exemption as a result of this consultation

This consultation covers Scotland. A parallel consultation is taking place that covers England and Wales which covers many general aspects of Scheme scope and its operation. Many of these issues relate to reserved powers and are therefore not considered in this consultation. We encourage Scottish EII stakeholders to reply to the Department for Business, Energy & Industrial Strategy (BEIS) consultation on these aspects of the Scheme, in addition to the option of responding to specific questions in this consultation.

What happens next

Once the consultation has closed, responses will be collated and analysed. We will continue to work closely with BEIS to understand the outcomes of their parallel consultation. Once all views and impacts have been considered, we shall publish our response.