What action is the Welsh Government taking to ensure that a UK-wide emissions trading system policy does not put Welsh energy-intensive industries at a disadvantage compared with global competitors?
UK Emissions Trading Scheme (UK ETS) participants (including energy intensive industries) subject to global competition and therefore at risk of ‘carbon leakage’ receive a proportion of allowances for free to manage these risks; with approximately 42 million allowances allocated to operators for free in both 2021 and 2022. Some energy intensive industries have had as high as 88% of their emissions covered by free allowances since the UK ETS came in to being.
The Welsh Government alongside the other nations of the United Kingdom operate the UK ETS as the UK ETS Authority. Earlier this year we published Developing the UK ETS, which amongst wide-ranging proposals,
included proposals for improvements to the current Free Allowance regime reflecting stakeholder views received from the 2019 consultation on carbon pricing and the call for evidence on free allocation in 2021.