Review of the schemes to compensate energy intensive industries for indirect emission costs in electricity prices
Read the full outcome
Detail of outcome
This consultation reviewed the schemes to compensate energy intensive industries for indirect emission costs in electricity prices.
It was part of a wider review assessing the risk of carbon leakage due to the indirect emission cost from the UK Emissions Trading Scheme (ETS) and compensation price support mechanism (CPS).
It also examined whether mitigating this risk provided wider benefits such as levelling up and supporting jobs, ensuring business viability until the point at which industrial decarbonisation technologies could be deployed, and increasing productivity.
Following a literature review, the consultation evidence and a sector assessment, we conclude that there continues to be a risk of carbon leakage due to indirect emission costs for some sectors. This means that there is a risk that the indirect emission costs found in the electricity price could lead to the displacement of production, and associated greenhouse gas emissions that would not have happened if climate rules and policies across jurisdictions were implemented in the same way.
Based on these changes to the schemes, the government will continue to provide compensation for the indirect emission cost due to the UK ETS and CPS over the current Spending Review period to March 2025.
The government response sets out the key policy changes of the updated schemes, including eligibility and subsidy intensity.
We will publish application guidance and forms for companies who wish to be assessed for eligibility shortly.
Feedback received
Detail of feedback received
We received 34 responses from, among others:
- energy intensive companies
- trade associations
- non-governmental organisations
They broadly supported the compensation schemes, but some raised particular points about:
- sectoral eligibility
- subsidy intensity
- additional conditions
We have published a summary of the responses.
Original consultation
Consultation description
This consultation seeks views and evidence on:
- the risk of carbon leakage due to the indirect emission cost from the UK ETS and CPS
- which sectors are most at risk
- the design of the potential scheme if there continues to be a rationale for compensation
We’re seeking views from a wide range of audiences, including:
- energy intensive industries (whether currently benefitting or not benefitting from the compensation schemes)
- other electricity consumers
- trade bodies
- consumer associations
- the devolved administrations
- any other interested parties
See the BEIS consultation privacy notice.
Please do not send responses by post to the department at the moment as we may not be able to access them.
Documents
Updates to this page
Published 14 June 2021Last updated 29 April 2022 + show all updates
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Government response published.
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Summary of responses added.
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First published.