UK Emissions Trading Scheme

Treasury written question – answered at on 13 March 2024.

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Photo of Stephen Crabb Stephen Crabb Chair, Welsh Affairs Committee, Chair, Welsh Affairs Committee

To ask the Chancellor of the Exchequer, whether he plans to make an assessment of the potential merits of introducing new measures to help support businesses participating in the emissions trading scheme.

Photo of Gareth Davies Gareth Davies The Exchequer Secretary

The Government is committed to supporting decarbonisation. That is why it protects sectors included in the Emissions Trading Scheme against carbon leakage by allocating free allowances, with installations vulnerable to carbon leakage receiving up to 100% of their emissions allowances for free based on sector benchmarks.

The Government also delivers compensation for the majority of indirect electricity costs imposed by the ETS and CPS on the UK’s most electricity-intensive businesses, through a compensation scheme, which is worth approximately £120 million a year.

In addition, the Government offers a range of support schemes for industry to decarbonise, such as the Industrial Energy Transformation Fund (IETF), which supports industrial sites with high energy use to transition to a low carbon future. Applications for phase 3 of the Fund, which is worth £185m, were launched in January 2024.

Lastly, at Spring Budget 2023, the Chancellor announced an unprecedented up to £20 billion for the early development of CCUS to help meet the Government’s climate commitments.

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