Energy intensive industries

A Westminster Hall debate on Energy intensive industries is due to take place on Wednesday 24 November 2021. The debate will be led by Jack Brereton MP.

Energy intensive industries refer to industrial sectors - usually manufacturing industries – that are high users of energy. For these industries energy costs are often a high proportion of their production costs. These sectors are diverse in their energy consumption in terms of energy sources (electricity, gas or other fuels) and volumes used.

Historically, electricity prices for energy intensive industries have been higher in the UK compared to comparable European countries. Industry bodies argue that higher electricity costs in the UK put domestic manufacturers at a competitive disadvantage in global markets. While industrial electricity prices in the UK have been high relative to Europe historically, gas prices have been comparably lower.

The current rise in energy prices in 2021 been driven by rising gas prices, but electricity prices have also followed because gas is one of the fuels used to generate electricity. Background and further explanation of recent energy price rises is covered in the Library briefing, Energy price crunch 2021.

Electricity prices also present a challenge for energy intensive industries to decarbonise. For many industries decarbonisation options often require switching from gas to electricity and a consequential increase in electricity consumption. With electricity prices high, many manufacturers argue it is not currently economically viable to switch to electrification.

This briefing pack provides background information on industrial energy prices. It includes information on Government support for the sector on electricity costs and decarbonisation.