UK Emissions Trading Scheme
The question
To ask the Secretary of State for Energy Security and Net Zero, what recent assessment he has made of the potential impact of UK Emissions Trading Scheme 's allowance allocation policy on (a) carbon leakage and (b) the offshoring of emissions.
Answered by Michael Shanks
The provision of Free Allocation under the UK ETS mitigates the risk of carbon leakage and associated offshoring of emissions by reducing industrial sectors’ exposure to the carbon price. The UK ETS Authority is reviewing Free Allocation policy to ensure it targets sectors most at risk of carbon leakage and is currently consulting on this topic, including alignment with the UK Carbon Border Adjustment Mechanism.
The Authority will assess how Free Allocation interacts with other policies to ensure a holistic approach to carbon leakage mitigation. An Impact Assessment will be published alongside the Government Response to the Free Allocation Review
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