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

Debate between Lord Leong and Lord Blencathra

Wednesday 28th October 2026 Grand Committee

[Lord Blencathra (Con)]

My noble friend makes a very good point. We seem to be getting a lot of duplicitous statements and comments about Rosebank. We have one of the biggest oil and gas fields in our history, sitting out there off the Shetland Islands. We should be using it. There is no moral sense in trying to import gas from around the world and not using our own supplies. It does not add any more to global warming whatever. We should be using it and I look forward soon to hearing what the Government’s decision on Rosebank will be. If we can announce a huge oilfield in the Falkland Islands, why is it morally wrong to announce an oilfield in our own territorial waters? No doubt one day we might be importing our own oil from the Falkland Islands.

The impact assessment, as I said, claims that it is part of the Government’s package for reindustrialisation. I am concerned that it is not reindustrialisation; it continues to stop it and it continues to be deindustrialisation. If these facts were recognised by the Government, why stop at businesses that fulfil a strategic criterion? Surely, competitiveness is a general good. Would not every business benefit from lower costs or higher efficiency? Would it not be more prudent, instead of arbitrarily determining which manufacturing businesses are worthy of being competitive, for the Government to allow free and fair competition for them all?

Given that the Government acknowledge that carbon taxes and subsidies add costs and reduce competitiveness, this instrument represents an opportunity for them to begin the process of removing them. They need not stop at renewables obligation contracts. The ETS, CBAM and the carbon price support all represent additional costs and a choice.

The United Kingdom represents 0.8% of world CO₂ emissions. China produces 33%, USA 15%, India 8% and Russia 5%. So it is economic madness to sacrifice British industry and consumers on the altar of saving the world when the British contribution makes no difference whatever. The Conservative Party recognised this early on in this Parliament. It seems that the Government are now coming around. I hope they will now act speedily.

[Lord Leong (Lab)]

My Lords, first, let me say a big thank you to all noble Lords for their contributions. I am grateful for some support across the Committee on this instrument. BICS is designed to address Britain’s long-standing competitiveness challenges by reducing electricity prices for British manufacturing businesses.

Let me address some of the questions posed by noble Lords—first, that made by the noble Baroness, Lady McIntosh, about the scheme and funding. I can confirm that any residual costs not covered by the energy system savings will be funded by the Exchequer. At the same time, exchequer funding will be delivered via the Low Carbon Contracts Company, which will reduce contract for difference charges for all domestic and non-domestic electricity suppliers from April 2027 to offset the costs of BICS not already covered by the energy system savings.

Let me address the point that the noble Earl, Lord Russell, and the noble Lord, Lord Fuller, made about hospitality and SMEs. First, BICS is targeted at manufacturing in the IS-8 sectors and foundational manufacturing industries that provide key inputs to the IS-8 sectors. At this point, I remind the noble Lord, Lord Blencathra, that it was this Government who published an industrial strategy to identify the eight sectors that are important for this country. Can I also remind the noble Lord that, when they were in government, I do not remember the last Conservative Government publishing any industrial strategy on this?

The eligibility criteria for BICS are designed to maximise impact against the objectives of the industrial strategy—namely, driving economic growth and investment benefits while keeping within the agreed cost envelope to avoid increasing costs for ineligible businesses and other energy users. We will continue to engage with those sectors that are currently not eligible for the scheme on any challenges that they face with higher energy costs. If firms miss the 30 November deadline, they will still be eligible to apply for the scheme next year; we have been engaging quite extensively with business to support its implementation.

Let me address the point from the noble Lord, Lord Fuller, on the various schemes. We have the supercharger scheme, which currently supports approximately 550 electricity-intensive industries, whereas BICS can support more than 10,000 businesses across a wider range of sectors that operate at a lower electricity intensity. So the supercharger is for high electricity-intensive industries, while BICS is for lower electricity-intensive industries. Business may benefit from both schemes where they meet the relevant eligibility criteria, but they cannot receive relief twice for the same activity.

BICS is designed to be accessible to all businesses. We expect a large proportion of the businesses that are eligible for BICS to be SMEs. BICS sits alongside our clean energy superpower mission. The long-term plan is to boost energy security and reduce our exposure to fossil fuel price shocks by building clean, home-grown energy. BICS supports businesses with immediate electricity costs and challenges by helping to free up investment that can be used to incentivise and enable the transition to electrification and decarbonisation in the long term.

Let me address the point about Jackdaw. I am sure that the noble Lord opposite will agree with and welcome the decision that we made on 21 October, when the North Sea Transition Authority granted consent for the Jackdaw project following the Energy Secretary’s agreement. This means that gas from the pre-existing North Sea project will start to supply homes and businesses across the country from the end of October 2026. As far as Rosebank is concerned, that decision is subject to a live regulatory process, and it would be inappropriate for me to comment on any individual cases at this stage. A decision on the granting —or not—of consent for the Rosebank project will be taken in due course, and there is no fixed timeline for a decision. It is imperative that all material is properly considered so that a robust decision can be taken.

BICS will benefit more than 10,000 manufacturing businesses in high-growth and strategic sectors, make them more internationally competitive, and drive investment and economic growth across Great Britain. The scheme will be reviewed in 2030 to assess its continued effectiveness in supporting the competitiveness of the British manufacturing industry.