Renewables Obligation and Electricity Capacity (Amendment) (British Industrial Competitiveness Scheme Excluded Electricity) Regulations 2026

Debate between Lord Fuller and Lord Leong

Wednesday 28th October 2026 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, this instrument was laid on 7 September 2026. I acknowledge and thank the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee for their work in scrutinising these regulations.

This instrument delivers one of the Government’s flagship commitments of the industrial strategy: the British industrial competitiveness scheme. BICS is a central part of our drive to engineer the reindustrialisation of Great Britain. BICS will address the persistent competitiveness challenges facing British manufacturers by reducing electricity costs for eligible businesses. It will drive investment and economic growth in strategically important sectors across Great Britain. BICS is expected to cut electricity costs by up to 25%, or £40 per megawatt hour, for over 10,000 manufacturing businesses. It will support frontier manufacturing industries within the IS-8 sectors and foundational manufacturing industries, which provide key inputs to their supply chains. This includes eligible businesses in the automotive, aerospace, clean energy industry, life sciences, chemicals and steel sectors and more.

For too long, British industries have faced some of the highest industrial electricity prices in Europe due to a combination of structural factors and policy costs. Eligible businesses will begin receiving support from April 2027, when they will be exempt from paying the indirect cost of the renewables obligation and the feed-in tariffs, and receive a further exemption on their capacity market costs from October 2027 onwards. Eligible businesses will also receive an additional payment in 2027 related to the amount they would have received had the scheme been in operation in 2026. The policy costs are paid for by the electricity suppliers, who typically charge them to their domestic and non-domestic customers via their electricity bills.

This instrument implements the renewable obligation and the capacity market exemptions, and it enables the renewable obligation level for the 2027-28 obligation period to be revised in light of BICS. It also provides for how the level of discount for the BICS eligibility criteria will be calculated and other elements of scheme design. An instrument to exempt eligible businesses from the indirect cost of the FIT—the feed-in tariffs—will also be made.

In conclusion, BICS will support British manufacturing businesses to be more internationally competitive by reducing electricity costs to support and drive investment and economic growth across Great Britain. I beg to move.

[Lord Fuller (Con)]

My Lords, we discussed this scheme in the Chamber some months ago, so I will not repeat all the points here or be so churlish not to recognise that any help for the materials economy that employs so many people—especially the chemical industry, which in turn produces the raw materials that other manufacturers can use for their output—is all to be welcomed.

However, the problem is that the sums of money we are talking about here are insufficient to make a real difference. They are no substitute for reducing energy costs, so that we at least stand a chance of competing in the global race. Of course, the industry is on its knees, suffering the highest energy costs in the western world. A relatively small number of businesses will benefit from BICS, leaving tens of thousands to fend for themselves and continue to pay for the feed-in tariffs, renewables obligations and capacity market obligations. If we just stopped all these well-meaning but counterproductive regulatory layers, we would not need BICS, which does not even start until next year.

With gas prices 12 times higher than the US NOLA benchmark, and TTF gas—upon which ammonia and other raw materials are produced—at €90 per megawatt hour, the need for help is now. Instead, only today, the Government announced a consultation on extending CBAM to refinery products, which will just drive up the cost of industrial raw materials even more. We will never get rich by erecting a high-tariff wall around our economy to keep everyone else out. We do not need more policy money-go-rounds like BICS; we just need energy costs that are comparable with those of our competitors. I hope only that the businesses that stand to benefit from this measure will be around to receive it on 1 April. Until then, we and they will just have to hold our breath.