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Environment Protection: Taxation

Department for Business, Innovation and Skills written question – answered on 28th November 2014.

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Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

To ask the Secretary of State for Business, Innovation and Skills, what estimate he has made of the number of businesses eligible for compensation for the indirect costs of (a) the EU Emissions Trading System and (b) the carbon price floor.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

To ask the Secretary of State for Business, Innovation and Skills, how many businesses have been compensated to date for the indirect costs of (a) the EU Emissions Trading System and (b) the carbon price floor; what the average award per eligible business was; and what the total monetary value of such compensation was.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

To ask the Secretary of State for Business, Innovation and Skills, what estimate he has made of the level of compensation that will be available for eligible companies for the indirect costs of (a) the EU Emissions Trading System and (b) the carbon price floor in each year from 2016-17 to 2019-20.

Photo of Matthew Hancock Matthew Hancock Minister of State (Department for Business, Innovation and Skills), Minister of State for Portsmouth, The Minister of State, Department of Energy and Climate Change

When initially estimating the overall budget for the compensation schemes for EU Emission Trading System (EU ETS) and the carbon floor price, a sector level approach was taken using ONS data on electricity consumption to estimate the total coverage and eligibility. At that time, it could not be assessed on a business by business basis.

To date we have paid £45.7 million to 54 electricity-intensive businesses that operate in international markets to compensate for the indirect costs of the EU ETS.

Of the 54 companies we have also paid £21.9 million to 52 of them for the cost of the carbon price support mechanism.

The average compensation per eligible business to date is therefore approximately £1.25 million. However, there is considerable variance in the size of payments.

In any given calendar or financial year from 2016 to 2020 the level of compensation is estimated to be:

a) circa £20 million for EU ETS; b) circa £70 million for carbon price support.

The overall cost of EU ETS compensation in the future depends on a number of variables including the EU carbon price, which will vary from year to year.

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