What steps is the Welsh Government taking to ensure that proposals to cut the UK emissions trading system allowance cap by 50 percent by 2024 does not put Welsh industry at a disadvantage with global competitors, resulting in higher levels of carbon leakage?
While the UK ETS cap is set to fall sharply in 2024, the current cap is set far above the level of verified emissions expected between 2021 and 2023. This means the Authority has allowed market participants to build up hedging positions. Any potential drop in the UK ETS cap in 2024 is not expected to be matched by an immediate fall in emissions from industry. Rather the transition will allow for the gradual reduction of emissions needed to meet Wales’ own climate targets, as well as those of our partners in the UK ETS Authority.