G/SCM/Q2/GBR/4  
20 March 2024 
(24-2421) Page: 1/4 
Committee on Subsidies and Countervailing Measures  Original:  English  
 
  
SUBSIDIES  
REPLIES TO THE QUESTIONS POSED BY CANADA1 REGARDING THE  
NEW AND FULL NOTIFICATION OF THE UNITED KINGDOM2 
The following communication, dated and received on 19 March 2024, is being circulated at the 
request of the delegation of United Kingdom.  
 
_______________  
 
 
The United Kingdom thanks Canada for its questions and provides the following responses:  
Question 1  
Could the United Kingdom please elaborate on what costs are considered "eligible" under 
each of the following programs?  
• Program 1.1.10 – Material and Manufacturing Sector Scheme  
• Program 2.1.1 – Automotive Transformation Fund (ATF)  
• Program 2.1.2 – Compensation for Energy Intensive Industries  
Reply : 
Material and Manufacturing Sector Scheme  (Program 1.1.10)  
For schemes provided by U nited Kingdom  Research and Innovation (UKRI), including the Materials 
and Manufacturing Sector Scheme, there are seven types of eligible costs:  
• Labour costs.  
• Overheads. This can include both "direct " (associated c osts of staff working directly on the 
projects) and "indirect " overheads (associated with back -office functions that support the 
running of a business enterprise) . 
• Materials costs.  
• Usage costs of capital assets.  
• Subcontract costs.  
• Travel and subsistence costs.  
• Other costs. This can include training costs, laboratory or workshop usage costs, market 
assessments, licensing of new technologies, patent filing costs for new intellectual property 
and value -added tax (VAT).  
More information on the dif ferent types of eligible costs, and information that is required to be 
disclosed by scheme recipients, can be found at: https://www.ukri.org/councils/innovate -
uk/guidance -for-applicants/costs -we-fund/costs -guidance -for-non-academic -organisations/ . 
 
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  Automotive Transformation Fund (ATF)  (Program 2.1.1)  
The Automotive Transformation Fund (ATF) supports late -stage R&D and capital investments across 
strategically important parts of the EV supply chain inclu ding batteries, electric drive units and 
hydrogen systems.  
'Eligible project costs ' under the ATF refers to expenditure incurred by a grant recipient which 
delivers the funded activities that enable the project to be carried out. Costs subsidised must be 
directly linked to the development of the new project.  
Eligible project costs can be different depending on the project, and include:  
1.  Capital costs such as, but not limited to, the acquisition (or construction) of buildings , 
infrastructure  and equipment . 
2.  Non-capital costs such as, but not limited to, training costs.  
Operational expenditure is not included under eligible project costs.  
Compensation for Energy Intensive Industries  (Program 2.1.2)  
The Scheme compensates for a proportion of the indirect costs of funding the United Kingdom 
Emissions Trading Scheme (ETS) and the Carbon Price Support Mechanism (CPS). These are costs 
associated with reducing emissions which are passed on by electricity suppliers.  
Eligible Energy Intensive businesses receive a payment of either 75% of their total indirect emissions 
costs or 1.5% of their Gross Value Added, (GVA) whichever is the higher amount.  
Further detail can be found in the scheme 's guidance:  
https://www.gov.uk/government/publications/uk -emissions -trading -scheme -and-carbon -price-
support -apply -for-compensation/compensation -for-the-indirect -costs-of-the-uk-ets-and-the-cps-
mechanism -guidance -for-applicants  
Question 2  
Canada notes that the information provided for Program 2.1.9 ( Industrial Ener gy 
Transformation Fund ) references "competition strain" as a factor impacting the grant 
amount per beneficiary. Is this referring to economic competition or to the amount of 
applicants applying for funding under the program?  
Reply : 
This is referring to the  three competition strains of the IETF, which are the different types of projects 
that IETF grant funding supports. These are:  
1.  Energy Efficiency deployment: Deployment of energy efficiency technologies on -site 
2.  Decarbonisation deployment: Deployment of deca rbonisation technologies on -site 
3.  Studies: Feasibility and/or Engineering studies to help businesses investigate what solution 
would work on their site.  
Grants are offered against clearly defined maximum subsidy intensity and grant thresholds. The 
subsidy  intensities and thresholds for each competition strain are as below. These are also detailed 
in the applicant guidance :  
https:/ /assets.publishing.service.gov.uk/media/65aa946375154600107b4a54/ietf -phase -3-spring -
2024-guidance.pdf . 
Energy Efficiency Deployment  
Minimum threshold  Maximum threshold  Maximum subsidy intensity  
100,000 GBP total eligible cost per 
study (large company)  
 
75,000 GBP total grant funding per 
application (small and medium)  14,000,000 total grant funding per 
study  30% (large company)  
40% (medium company)  
50% (small/micro company)  G/SCM/Q2/GBR/4  
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  Decarbonisation Deployment  
Minimum thres hold Maximum threshold  Maximum subsidy intensity  
100,000 GBP total eligible cost per 
study (large company)  
 
75,000 GBP total grant funding per 
application (small and medium)  30,000,000 GBP total grant funding 
per study  50% (large company)  
60% (medium company)  
70% (small/micro company)  
Feasibility Studies  
Minimum threshold  Maximum threshold  Maximum subsidy intensity  
30,000 GBP total eligible cost per 
study  7,000,000 GBP total grant funding 
per study  50% (large company)  
60% (medium company)  
70% (small/micro company)  
Engineering Studies  
Minimum threshold  Maximum threshold  Maximum subsidy intensity  
50,000 GBP total eligible cost per 
study  14,000,000 GBP total grant funding 
per study  25% (large company)  
35% (medium company)  
45% (small/micro company)  
Uplifts in maximum subsidy intensities are available for: Engineering studies for knowledge sharing 
activities (up to 15%); and deployment projects where the industrial site is located in an area of 
lesser economic advantage (5-15%, depending on the type of area).  
Question 3  
Program 2.1.11 ( Plug-in Grants ) specifies that "purchasers of vehicles are the 
beneficiaries" but that "the funding is paid to vehicle manufacturers, with the saving 
passed on to the purchaser."  
Could the United Kingdom explain this process? At what time is the support provided to 
manufacturers (e.g. at the time of sale)? Are manufacturers required to pass on the total 
value of the subsidy to the purchaser?  
Reply : 
The grant is applied at the point of sa le and is reflected in the final price/invoice. Vehicle 
manufacturers are required to pass on the total value of the subsidy to the purchaser.  Vehicle 
manufacturers are required to ensure that models comply with the eligibility requirements of the 
respecti ve schemes. Further information on these eligibility requirements can be found at: 
https://www.gov.uk/plug -in-vehicle -grants . 
To ensure vehicle models comply with th e emissions and technical eligibility requirements, there is 
an application process where vehicle manufacturers evidence their eligibility and seek approval for 
their models to be placed on the respective grant schemes. The U nited Kingdom  type approval body, 
the Vehicle  Certification Agency (VCA), supports the Office for Zero Emission Vehicles (OZEV), who 
own the policy, in the application process. Once approved, there is an online platform, managed by 
the Driver and Vehicle Licensing Agen cy (DVLA), where vehicle manufacturers and their dealerships 
log their orders to enable them to claim the respective grant. The DVLA supports OZEV in the delivery 
of the grants and hold the relevant vehicle data to ensure vehicle compliance. There is an au dit 
process where a percentage of orders have their invoices checked to ensure the grant has been 
applied correctly and details of the vehicle on the portal align with what is included on the invoice.  
Regarding the provision of payments, every month OZEV c ompiles all orders that have been 
completed (in the last stages of the process) for each respective manufacturer. These are then 
checked with the main vehicle manufacturer contact, to ensure agreement. Once agreed, the 
payment for the month is then paid ou t to the respective manufacturers  who are then responsible 
for how they decide to disseminate those funds to the respective dealer network (if they choose to 
do so) . If the manufacturer does not decide to disseminate those funds to the respective dealer G/SCM/Q2/GBR/4  
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  network, or the manufacturer does not have a dealership network, (e.g., if the manufacturer is 
small) the funds would get to the purchaser by virtue of the vehicle being discounted when ordered.  
Guidance on applying for a plug -in grant, including the eligibi lity requirements  and advice on using 
the online portal , can be found at: https://www.gov.uk/guidance/apply -for-a-plug-in-vehicle -grant . 
 
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