Carbon & Energy Newsletter (UK) - May 2026

Hello and welcome to the May 2026 edition of your Carbon & Energy Newsletter.

This month we will be focusing our attention on a new UK government incentive, the British Industrial Competitiveness Scheme (BICS), and investigating:

• The basic principles
• Eligibility
• Application requirements
• Timelines

The scheme is currently under consultation and will potentially cut electricity bills by up to 25% for eligible businesses. There’s a lot of new information to download so we’ve attempted to extract the key information for you.

We’ve also still got plenty going on across the usual regulatory and disclosure platforms which have been condensed into a quick update for UK ETS, CCA, CDP and ESOS.

So, grab a brew, take a well-deserved break and we hope you enjoy your latest newsletter update!

British Industrial Competitiveness Scheme (BICS)

The British Industrial Competitiveness Scheme (or to add another acronym into the world of carbon and energy, ‘BICS’), is a new UK government-led scheme which aims to support eligible industries with the cost of rising electricity bills. Businesses in the scheme will benefit by being exempt from paying the indirect costs towards Renewables Obligation, Feed-in Tariffs and the Capacity Market.

Similar to other incentives, its purpose is to maintain industry competitiveness in growing manufacturing sectors by aligning electricity costs with EU economies. As the UK has seen a sharper rise in electricity prices compared to other nations, it aims to ensure continued local investment for identified growth industries and avoid any potential carbon leakage.

Eligibility

As with any scheme designed to save money, there are a few hurdles to be jump through for eligibility:

1. You must operate in one of the manufacturing ‘frontier industries’ within an IS-8 sector, or in a manufacturing ‘foundational industry’ which provides important inputs to the frontier industries.
2. You must be a business that carries out manufacturing activities.
3. You must meet the required level of electricity intensity.

If, like us, this instantly drives you to a Google search on what these industries are, these have fortunately been provided – see the references section for the full list [1].

Once you’ve identified whether you are within an eligible industry, you then need to pass the required level of electricity intensity. This will be calculated as [electricity expenditure ÷ GVA]. The thresholds are currently as follows:

• For manufacturing frontier industries, only SIC codes with electricity intensity over 0.9% will be eligible.
• For manufacturing foundational industries, only SIC codes with electricity intensity over 2.7% will be eligible.

A form of pro-rating at a business level will then be used to identify the level of exemption that a company is entitled to. This is assessed through reviewing site electricity consumption and the proportion relating to eligible processes:

• <25% electricity relates to eligible manufacturing = no exemption
• 25-50% electricity relates to eligible manufacturing = 50% exemption
• >50% electricity relates to eligible manufacturing = 100% exemption

Evidence

Companies wishing to claim BICS support will be required to provide:

• Company name/number.
• Eligible industry SIC/HC codes.
• Energy supplier information.
• Details of all metering (MPANs) related to the site.
• Evidence on the proportion of site electricity which relates to eligible production processes.

Further guidance is expected to be released on how a manufacturing site is defined, how to deal with shared meters, pro-rating percentages and additional evidence requirements.

Timelines

The scheme is currently in its second stage of consultation which will close on 14th May [2].

Following consultation, it is expected that the legislation will be put in place by Autumn 2026. It is currently proposed that for the first year of BICS, a time-limited eligibility identification window will then take place from 1st October 2026 to 8th January 2027. Following this, a two-year certificate validity period will be issued from 2027 to 2029, and an annual declaration of eligibility will be required.

SLR are keeping a close eye on developments and will share further updates as and when they become available.

UK Emission Trading Scheme (UK ETS)

If you applied for a UK ETS free allowance allocation via the Baseline Data Report (BDR) submission process in 2024, you are required to undertake the second stage of this process via your METS account, by the end of June, to complete the application process.

For most organisations this is simply a case of completing the required actions in METS and resubmitting the previous BDR data. However, if your production was significantly impacted by Covid-19, you do have the option to exclude either 2020 or 2020 & 2021 data from your application (which may potentially lead to an initial increase in your free allowance allocation).

If your site produces a ‘good’ classified as a UK CBAM good (Carbon Border Adjustment Mechanism) you will be required to produce a new BDR (incorporating CBAM and non-CBAM sub-installations), have this verified, and re-submit this to the Environment Agency.

To identify CBAM goods, you should consult ‘UK ETS 12A FAR – Completing the second stage of the free allocation application’ [3].

For the full free allowance application process guidance, published by DESNZ, see the references section [4].

Carbon price

There has recently been a significant fluctuation in carbon price across the UK & EU ETS. Market trends currently demonstrate their highest rates in January, then substantial drops in March, followed by a more recent stabilisation again in April. UK ETS produced its highest prices in January achieving £72/tonne. The March drop then achieved lows of £35/tonne, followed by the April stabilisation at around £50/tonne. The EU allowances continue to mirror UK markets with similar patterns. January started with a high of €92/tonne, followed by a €64/tonne low in March and €75/tonne in April.

Further details on the UK Emissions Trading Scheme markets can be found in the references section [5].

Climate Change Agreements

Data collection for 2025 performance is upon us!

At the point of publication for this newsletter, it is likely that you will have been (or soon be) notified by your sector helpdesk to provide 2025 energy and production data. This will also include a request to explain performance through energy efficiency and carbon reduction measures that were implemented during the reporting year. It is important to note, that although this year’s request is for a ‘fallow year’ and data is not assessed against targets, it is still a beneficial exercise as it will reduce the burden and help prepare for 2027 performance assessments. The new performance assessment criteria will be a regular feature in the sector data requirements, therefore it is advised that accurate records and procedures are introduced throughout the year to mitigate issues during the annual request. For those also captured by ESOS and SECR reporting, this information aligns nicely across all of the regulatory platforms.

CDP

On the near horizon, CDP’s disclosure window is fast approaching with companies starting to prepare now.

Requests are already being submitted to companies to disclose information which can then be accepted or declined for reporting organisations. The response window will then go live from the week of 15th June 2026, with deadlines to disclose information for a score during the week of 14th September.

ESOS

And finally, although the ESOS deadline is still over a year away (5th December 2027), the time to act is now!

Large organisations that are captured by ESOS should be starting to assign their ESOS lead assessors and plan their route to compliance. The year is already passing by far too quickly for our liking and if ESOS is put on the ‘back-burner’ until the end of the year it may become difficult to find an available lead assessor before the panic kicks in!

If you are a large undertaking that meets either one or both of the following conditions for the past two years, then it’s likely that you will need to comply with ESOS:

• Employs 250 or more people.
• Has an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million.