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Carbon Trading Scheme

Volume 409: debated on Friday 18 July 2003

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To ask the Secretary of State for Environment, Food and Rural Affairs what plans she has to ensure that the price of carbon purchase in the UK carbon trading scheme does not fall below a level at which the mechanisms of the scheme cease to operate effectively. [126917]

Defra, as scheme regulator, has no plans to intervene in UK Emissions Trading Scheme (UK ETS) market activity. Like any market, the UK ETS allowance price is determined by actual supply and demand of allowances. Participants in the scheme are likely to trade based on profit maximisation decisions and so it is unlikely that prices would drop to a level at which market activity ceases. For a one year old voluntary scheme, there has been an encouraging amount of liquidity and stability in the fledgling market. First year results are published at http://www.defra.gov.uk/environment/climatechange/trading/index. htm