From 2027, a new scheme aimed at enhancing British industrial competitiveness will lead to energy cost reductions of up to £40 per megawatt hour, translating to a decrease of approximately 25%, for more than 7000 electricity-intensive manufacturing businesses, encompassing the chemical sector, according to the latest industrial strategy from the UK government. The initiative aims to align UK electricity prices more closely with those of other key European economies.
These enterprises will also be exempt from charges related to the renewables obligation, feed-in tariffs, and the capacity market – initially established to fund green energy initiatives. Starting in 2026, energy-intensive sectors, such as steel, chemicals, and fertilizer producers, will benefit from a 90% discount – increased from 60% – on network charges typically borne through the British Industry Supercharger.
The government aspires to nearly double annual investment in advanced manufacturing from £21 billion to £39 billion by 2035. This is merely one focus area outlined in the industrial strategy released on 23 June 2025: a decade-long plan to position the UK as the premier investment destination globally. In this strategy, the UK government highlights eight sectors – referred to as the IS-8 – which it deems possess the highest potential for economic expansion and will, consequently, receive the majority of governmental industrial assistance.
This industrial strategy signifies a pivotal moment for the UK economy and a distinct departure from past short-sightedness and temporary fixes, remarked UK Prime Minister Keir Starmer. Beyond advanced manufacturing, the IS-8 encompasses sectors such as defence, clean energy, digital and technology, creative industries, financial services, life sciences, and professional and business services.
With regard to life sciences, the UK government aims for the UK to emerge as the foremost life sciences economy in Europe by 2030, and by 2035, to rank as the third most significant globally after the US and China. The focus will be on pharmaceuticals and medical technologies, with a goal to reduce trial approval durations to under 150 days and to simplify regulation and market entry.
For clean energy sectors, the objective is for the UK to have at least doubled investments in cutting-edge clean energy industries to surpass £30 billion annually by 2035. The strategy outlines plans to “double down” on clean energy sectors with the highest growth potential and to provide “targeted and catalytic” funding to foster job growth, innovation, and expansion.
Regarding digital and technology, the strategy recognizes the necessity for more start-ups to evolve into larger entities and the importance of supporting deep tech companies. The government envisions the UK ranking among the top three locations globally for cultivating technology firms.
A new Supply Chain Centre, expected to be completed by the year’s end, will conduct further analysis by reviewing inputs, evaluating the effects of upcoming trends on demand, and identifying required actions. Prime Minister Keir Starmer asserted that the strategy offers long-term certainty for British businesses to invest, innovate, and generate employment.
Tanya Sheridan from the Royal Society of Chemistry (RSC) praised the focus on research and underscored the importance of unified efforts across various strategies, highlighting the vital role of chemistry expertise and knowledge.
Kieron Flanagan from the University of Manchester characterized the strategy as more of a guideline and criticized its emphasis on UK-specific technological advancement. He pointed out the absence of a strategy for integrating and commercializing promising technologies from global sources.
The Chemical Industries Association expressed its approval of the centrality of chemicals in the industrial strategy and the initiative to lower energy costs; however, they believe further action is required for the scheme details to effectively enhance industrial competitiveness.
There remains eagerness for more information regarding the IS-8 sectors, including life sciences and financial services, as well as an upcoming strategy for the defence industry.