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EU Emissions Trading Scheme

Volume 476: debated on Thursday 22 May 2008

To ask the Chancellor of the Exchequer what estimate his Department has made of the revenue from auctioning allowances for large electricity producers under the EU Emissions Trading Scheme (a) in the period up to 2012-13 and (b) following the auctioning of 100 per cent. allowances from 2012-13. (207037)

The Government plan to auction 7 per cent. of allowances in phase II of EU 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). Under the terms of the EU EST Directive 2003/87/EC, the total number of allowances auctioned cannot exceed 10 per cent. of the number allocated during phase II. The auctioning levels for the EU ETS post 2012 have not yet been determined. However, the Chancellor announced in Budget 2008 that the UK intends to auction 100 per cent. of allowances to the large electricity producers.

The amount of revenue will be influenced by the market price at the time of the auctions. It would be improper for Government to speculate on how the market will function in the future. Therefore we cannot give an estimate of the amount of revenue the auctions will raise in the period up to 2012-13 or upon auctioning of 100 per cent. of allowances to large electricity producers from 2013 onwards.