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EU Emissions Trading Scheme

Volume 470: debated on Thursday 10 January 2008

To ask the Secretary of State for Environment, Food and Rural Affairs what his estimate is of the revenue which will be obtained from auctioning of allowances under Phase II of the European Emissions Trading Scheme in each year over the period of the scheme; what proportion of this revenue he expects will be spent on schemes (a) to reduce carbon dioxide emissions and (b) to mitigate the effects of global warming; and if he will make a statement. (175650)

Under the terms of the EU ETS Directive 2003/87/EC the total number of allowances auctioned cannot exceed 10 per cent. of the number allocated during Phase II. We plan to auction 7 per cent. of allowances in Phase II of the EU Emissions Trading Scheme (ETS), amounting to approximately 85 million allowances, plus those allowances from installations that close during Phase II and any unused surplus from the New Entrant Reserve (NER).

The Government’s spending priorities are not in general, determined by the way in which the money is raised. The spending review process ensures that resources are allocated efficiently to deliver Government objectives and ensures priorities receive the increased levels of funding, as set out in the comprehensive spending review (CSR).

The CSR increases DEFRA’s budget by 1.4 per cent. in real terms, from £3,508 million in 2007-08 to £3,960 million. This increase allows the Government to allocate substantial resources to tackle climate change including the Environmental Transformation Fund, and increased resources for flood defences to help the UK adapt.