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UK wastes £500k on unused energy scheme

The UK Treasury spent almost £500,000 on an emergency scheme for energy traders that was later closed.

The energy markets financing scheme (EMFS) was launched as a £40 billion government-guaranteed backstop fund by the Treasury and the Bank of England.

It was designed to offer liquidity to energy traders to deal with massive margin calls, but was shut down in January when wholesale gas prices fell.

According to information obtained by the Guardian under a freedom of information request, the Treasury said it spent £465,000 on external technical consultants to create the EMFS, which had no applications.

FTI Consulting was paid £400,000 and law firm Hogan Lovells received £65,000 for their advisory roles.

The EMFS was announced by Liz Truss, then foreign secretary, in September as part of a range of contingency measures to prevent the energy crisis from worsening during winter.

However, the scheme was later closed after a sharp fall in wholesale gas prices.

According to the Treasury, energy firms were able to access necessary credit lines from commercial lenders without the need for government-backed guarantees.

The EMFS was designed to supplement commercial financing rather than replace it.

The Bank of England declined to reveal its expenditure on the scheme.

A HMT spokesperson said: “The scheme was introduced as part of a range of contingency measures to support the energy sector.

“Since the launch of the scheme prices in the wholesale gas markets have declined markedly and this has reduced some of the pressure facing eligible energy firms.

“Due to improvements in market conditions since the launch of the scheme, energy firms were able to access the necessary lines of credit from commercial lenders without the need for the government-backed guarantee.”

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