Guidance

Energy Bills Discount Scheme energy and trade intense industries assessment methodology

Updated 28 March 2024

The Energy and Trade Intensive Industries sectors (ETIIs) eligible for a higher level of energy support were assessed on two criteria, Energy Intensity and Trade Intensity.

Energy intensity

Energy intensity estimates how exposed a sector may be to high electricity and gas costs. Higher energy intensity suggests greater vulnerability to high energy costs. This criterion was underpinned by two metrics; Electricity intensity and Gas intensity.

Electricity intensity is electricity consumption compared to a sector’s Gross Value Added (GVA). Gas intensity is gas consumption compared to a sector’s GVA. Data on electricity and gas consumption does not exist for the economy at Standard Industry Classification (SIC) Class (four-digit SIC code) level, so it has been modelled using the process below.

Electricity and gas consumption in the Digest of UK Energy Statistics (DUKES) data was allocated at approximately Standard Industry Classification (SIC) Division (2-digit code) level using Office for National Statistics (ONS) Input-Output tables. Specifically, sectors’ intermediate consumption of ‘electricity, transmission and distribution’ and ‘gas; distribution of gaseous fuels through mains, steam and air conditioning supply’ was used. Sectors in the Input-Output tables were mapped to the corresponding DUKES categories and gas or electricity consumption was estimated based on the share of gas or electricity consumption, in pounds, that each sector accounted for within the DUKES category. This first step assumes that the average unit price for gas and electricity during the reference period did not differ between sectors of the economy.

The model then breaks down consumption further to a SIC Class (4-digit code) level by using turnover estimates from the Inter-Departmental Business Register (IDBR), mapped to Input-Output sectors, to estimate the proportion of electricity or gas consumption by each SIC Class. This second step assumes that, within a Division, production uses the same amount of electricity or gas per pound of turnover.

Electricity consumption and gas consumption were compared to sector GVA reported in the ONS Annual Business Survey at Class (4-digit) level. This provided the estimates for electricity intensity and gas intensity.

Where there was insufficient data available at a Class (4-digit) SIC level, then the average results of Classes within the Group (3-digit) level were used to fill missing values. If 3-digit level data was still insufficient, then the average results of Classes within the Division (2-digit) was applied. This gave an improved estimate for sector values rather than leaving them blank or applying an economy-wide average.

For some sectors, there was insufficient data to calculate a 2-digit level estimate. In these cases, economy-wide median values for electricity and gas intensity were applied. This was the case for Agriculture, where it was not possible to find robust GVA estimates that were consistent with data used for other sectors.

Only 4 out of 31 Agriculture sub-sectors had data at the 4-digit level and these did not pass the energy intensity threshold. This was deemed to be an insufficient proportion of sectors to base a 2-digit level estimate for Agriculture on. This meant the remaining 27 Agriculture sub-sectors were given the economy-wide median. Mining support service activities (SIC 09) and Manufacture of tobacco products (SIC 12) were other examples of sectors that did not have representative data where median data was applied.

The gas and electricity energy intensities were given standardised scores across the whole economy with the sector with the highest intensity being scored 100 and the lowest intensity scored 0. These scores were summed to produce the total Energy Intensity score. Electricity intensity and gas intensity scores were given equal weight in the Energy Intensity score.

An eligibility threshold was applied to ensure only the sectors that were most energy intensive would be eligible for support.

Trade intensity

Trade intensity estimates international competition and the likelihood that firms in a sector would struggle to pass on additional energy costs without losing market share to imports or in export markets. A higher Trade Intensity indicates a greater risk of not being able to pass through costs.

Trade intensity was based on goods trade only and trade data was sourced from ONS UK Trade in Goods by classification of product by activity, at a division (2-digit) level. This dataset was combined with IDBR turnover to produce a trade intensity metric. The formula for trade intensity is (Imports + Exports) / (Turnover + Imports) as used in the EII Compensation Scheme.

The analysis was produced at a 2-digit SIC code level to give a wider coverage of sectors. Many 2-digit services sectors did not have applicable goods trade data. This was consistent with the nature of these sectors, and meant these service sectors were deemed to have low trade intensities for this assessment and less likely to be considered for support.

The trade intensity for each sector was given a standardised score, with the highest intensity sector being scored 100 and the lowest being scored 0. The scores for each sector represented their Trade Intensity in the Framework.

Eligibility thresholds

Eligibility thresholds were applied to energy and trade intensity scores to ensure that only the most energy and trade intensive sectors would be eligible for support.

The energy intensity threshold was set at the 80th percentile - a sector must be in the top 20% of energy intensive sectors in the economy to qualify. This level was set in conjunction with the distribution of sector scores to focus on the most energy intensive sectors relative to the whole economy.

The trade intensity threshold was set at the 60th percentile - a sector must be in the top 40% most trade intensive to qualify. This level was set in conjunction with the distribution of sector scores to focus on the most trade intensive sectors relative to the whole economy.

Threshold levels were set with reference to the distribution of sector scores.

A sector was required to pass both thresholds to be eligible for ETII support. Sectors that passed both thresholds are listed below.

Sensitivity analysis

Sensitivity analysis was conducted on Trade Intensity by comparing results when using Annual Business Survey turnover data and Inter-Departmental Business Register turnover data. There were minimal differences in the results with only two new sectors becoming eligible when using the Inter-Departmental Business Register. To maintain consistency with other datasets and take a more analytically conservative approach, these two sectors were included in the final ETII List.

Table 1: Final Framework for ETII eligible sectors (output)

Criteria [threshold]	Metric
Energy Intensity [80th percentile]	Electricity Intensity
Energy Intensity [80th percentile]	Gas Intensity
Trade Intensity [60th percentile]	Goods trade Intensity

The list of eligible ETII sectors can be found in Annex A.

A list of public sources used for the analysis can be found in Annex B. Data has been selected for currency and to avoid the pandemic-affected period as much as possible, so reference periods for data used may differ.

Annex A: List of Eligible Sectors for Energy and Trade Intensive Industries

4-Digit SIC Code	Sector Description
05.10	Mining of hard coal
06.10	Extraction of crude petroleum
08.11	Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate
08.12	Operation of gravel and sand pits; mining of clays and kaolin
08.99	Other mining and quarrying n.e.c.
10.11	Processing and preserving of meat
10.12	Processing and preserving of poultry meat
10.20	Processing and preserving of fish, crustaceans and molluscs
10.41	Manufacture of oils and fats
10.42	Manufacture of margarine and similar edible fats
10.51	Operation of dairies and cheese making
10.61	Manufacture of grain mill products
10.62	Manufacture of starches and starch products
10.71	Manufacture of bread; manufacture of fresh pastry goods and cakes
10.81	Manufacture of sugar
10.82	Manufacture of cocoa, chocolate and sugar confectionery
10.85	Manufacture of prepared meals and dishes
10.86	Manufacture of homogenised food preparations and dietetic food
10.89	Manufacture of other food products n.e.c.
10.91	Manufacture of prepared feeds for farm animals
11.02	Manufacture of wine from grape
11.03	Manufacture of cider and other fruit wines
11.05	Manufacture of beer
11.06	Manufacture of malt
13.10	Preparation and spinning of textile fibres
13.20	Weaving of textiles
13.30	Finishing of textiles
13.91	Manufacture of knitted and crocheted fabrics
13.92	Manufacture of made-up textile articles, except apparel
13.93	Manufacture of carpets and rugs
13.94	Manufacture of cordage, rope, twine and netting
13.95	Manufacture of non-wovens and articles made from non-wovens, except apparel
13.96	Manufacture of other technical and industrial textiles
13.99	Manufacture of other textiles n.e.c.
14.11	Manufacture of leather clothes
14.12	Manufacture of workwear
14.19	Manufacture of other wearing apparel and accessories
14.31	Manufacture of knitted and crocheted hosiery
14.39	Manufacture of other knitted and crocheted apparel
15.11	Tanning and dressing of leather; dressing and dyeing of fur
15.12	Manufacture of luggage, handbags and the like, saddlery and harness
16.10	Sawmilling and planing of wood
16.21	Manufacture of veneer sheets and wood-based panels
16.22	Manufacture of assembled parquet floors
16.29	Manufacture of other products of wood; manufacture of articles of cork, straw and plaiting materials
17.11	Manufacture of pulp
17.12	Manufacture of paper and paperboard
17.21	Manufacture of corrugated paper and paperboard and of containers of paper and paperboard
17.22	Manufacture of household and sanitary goods and of toilet requisites
17.23	Manufacture of paper stationery
17.24	Manufacture of wallpaper
17.29	Manufacture of other articles of paper and paperboard
19.10	Manufacture of coke oven products
19.20	Manufacture of refined petroleum products
20.11	Manufacture of industrial gases
20.12	Manufacture of dyes and pigments
20.13	Manufacture of other inorganic basic chemicals
20.14	Manufacture of other organic basic chemicals
20.15	Manufacture of fertilisers and nitrogen compounds
20.16	Manufacture of plastics in primary forms
20.17	Manufacture of synthetic rubber in primary forms
20.20	Manufacture of pesticides and other agrochemical products
20.41	Manufacture of soap and detergents, cleaning and polishing preparations
20.60	Manufacture of man-made fibres
22.11	Manufacture of rubber tyres and tubes; retreading and rebuilding of rubber tyres
22.19	Manufacture of other rubber products
22.21	Manufacture of plastic plates, sheets, tubes and profiles
22.22	Manufacture of plastic packing goods
22.23	Manufacture of builders’ ware of plastic
22.29	Manufacture of other plastic products
23.11	Manufacture of flat glass
23.12	Shaping and processing of flat glass
23.13	Manufacture of hollow glass
23.14	Manufacture of glass fibres
23.19	Manufacture and processing of other glass, including technical glassware
23.20	Manufacture of refractory products
23.31	Manufacture of ceramic tiles and flags
23.32	Manufacture of bricks, tiles and construction products, in baked clay
23.41	Manufacture of ceramic household and ornamental articles
23.42	Manufacture of ceramic sanitary fixtures
23.43	Manufacture of ceramic insulators and insulating fittings
23.44	Manufacture of other technical ceramic products
23.49	Manufacture of other ceramic products
23.51	Manufacture of cement
23.52	Manufacture of lime and plaster
23.61	Manufacture of concrete products for construction purposes
23.62	Manufacture of plaster products for construction purposes
23.63	Manufacture of ready-mixed concrete
23.64	Manufacture of mortars
23.65	Manufacture of fibre cement
23.69	Manufacture of other articles of concrete, plaster and cement
23.70	Cutting, shaping and finishing of stone
23.91	Production of abrasive products
23.99	Manufacture of other non-metallic mineral products n.e.c.
24.10	Manufacture of basic iron and steel and of ferro-alloys
24.20	Manufacture of tubes, pipes, hollow profiles and related fittings, of steel
24.31	Cold drawing of bars
24.32	Cold rolling of narrow strip
24.33	Cold forming or folding
24.34	Cold drawing of wire
24.41	Precious metals production
24.42	Aluminium production
24.43	Lead, zinc and tin production
24.44	Copper production
24.45	Other non-ferrous metal production
24.46	Processing of nuclear fuel
24.51	Casting of iron
24.52	Casting of steel
24.53	Casting of light metals
24.54	Casting of other non-ferrous metals
25.92	Manufacture of light metal packaging
26.11	Manufacture of electronic components
26.52	Manufacture of watches and clocks
27.20	Manufacture of batteries and accumulators
27.32	Manufacture of other electronic and electric wires and cables
27.51	Manufacture of electric domestic appliances
28.91	Manufacture of machinery for metallurgy
91.01	Library and archive activities
91.02	Museum activities
91.03	Operation of historical sites and buildings and similar visitor attractions
91.04	Botanical and zoological gardens and nature reserve activities

Annex B: List of sources used for the ETII analysis

1. ONS Annual Business Survey (average 2017-19) (2 November 2022)

2. ONS Inter-Departmental Business Register Survey (as at March 22) (11 November 2022)

3. ONS Input-Output Supply and Use tables (average of 2017-19) (11 November 2022)

4. DUKES Supply and consumption of natural gas and colliery methane (DUKES 4.2) (2021) (11 November 2022)

5. DUKES Commodity balances, public distribution system and other generators (DUKES 5.2) (2021) (11 November 2022)

6. ONS UK trade in goods by classification of product by activity time series (average 2017-19) (15 November 2022)