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Climate Change: Emissions Trading

Volume 700: debated on Thursday 20 March 2008

asked Her Majesty's Government:

What estimate they have made of the financial benefit to United Kingdom energy companies arising from the free allocation of permits under the European Union's Emissions Trading Scheme in 2008–10. [HL2308]

The value of ETS allowances is set by the EU carbon market, and varies from day to day. At the current price for EU Emissions Trading Scheme allowances, and at the current pound to euro exchange rate, the free allocation to UK electricity generators is potentially worth around £1.6 billion per year. The exact benefit depends on many factors including the extent to which companies have included the value of the allowances in the price of electricity to end users.