This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Detail of outcome
We assessed the evidence received against the data we already held, and used it to develop proposals - including consideration of eligibility criteria for compensation and how a compensation scheme might operate. We issued a formal consultation on these proposals in October 2012.
The compensatory measures will be subject to state aid considerations and we’ll be engaging with the European Commission on our outline proposals.
We're asking for evidence on compensation for the indirect costs of the Carbon Price Floor and EU Emissions Trading Scheme (ETS).
This consultation ran from
We’re asking for evidence to enable us to update the information we have on the electricity intensity of different sectors, and how these policies impact on their competitiveness.
In order for the UK to ensure value for money and ‘additionality’ for any aid provided for carbon costs we will need to consider and prove that any compensation addresses the following issues:
- necessity: why is aid needed and what common EU goal is being addressed?
- what is the incentive effect: will aid genuinely change the behaviour of businesses? - the UK will have to make sure the Commission are content that there’s a real risk of carbon leakage without the aid
- ‘proportionality’: aid generally must be limited to the least amount necessary, and aid of this sort is usually only considered proportional where there is a continued incentive to improve environmental performance - this may be done by ensuring that the beneficiary still pays a proportion of the tax or by including some environmental conditionality
- distortions to competition and trade: the UK will need to analyse the impacts on all potentially affected markets and prove that the competitiveness of companies in other markets or other member states is not unduly affected
Compensation for the indirect costs of the carbon price floor and EU emissions trading scheme (ETS): call for evidence
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