Consultation outcome

Review of the schemes to compensate energy intensive industries for indirect emission costs in electricity prices

This consultation has concluded

Download the full outcome

Detail of outcome

This consultation reviewed the schemes to compensate energy intensive industries for indirect emission costs in electricity prices.

It was part of a wider review assessing the risk of carbon leakage due to the indirect emission cost from the UK Emissions Trading Scheme (ETS) and compensation price support mechanism (CPS).

It also examined whether mitigating this risk provided wider benefits such as levelling up and supporting jobs, ensuring business viability until the point at which industrial decarbonisation technologies could be deployed, and increasing productivity.

Following a literature review, the consultation evidence and a sector assessment, we conclude that there continues to be a risk of carbon leakage due to indirect emission costs for some sectors. This means that there is a risk that the indirect emission costs found in the electricity price could lead to the displacement of production, and associated greenhouse gas emissions that would not have happened if climate rules and policies across jurisdictions were implemented in the same way.

Based on these changes to the schemes, the government will continue to provide compensation for the indirect emission cost due to the UK ETS and CPS over the current Spending Review period to March 2025.

The government response sets out the key policy changes of the updated schemes, including eligibility and subsidy intensity.

We will publish application guidance and forms for companies who wish to be assessed for eligibility shortly.

Feedback received

Detail of feedback received

We received 34 responses from, among others:

  • energy intensive companies
  • trade associations
  • non-governmental organisations

They broadly supported the compensation schemes, but some raised particular points about:

  • sectoral eligibility
  • subsidy intensity
  • additional conditions

We have published a summary of the responses.


Original consultation

Summary

We're seeking views on the risk of carbon leakage due to the indirect emission cost from the UK Emissions Trading Scheme (ETS) and compensation price support (CPS) mechanism plus feedback on sector eligibility and scheme design.

This consultation ran from
to

Consultation description

This consultation seeks views and evidence on:

  • the risk of carbon leakage due to the indirect emission cost from the UK ETS and CPS
  • which sectors are most at risk
  • the design of the potential scheme if there continues to be a rationale for compensation

We’re seeking views from a wide range of audiences, including:

  • energy intensive industries (whether currently benefitting or not benefitting from the compensation schemes)
  • other electricity consumers
  • trade bodies
  • consumer associations
  • the devolved administrations
  • any other interested parties

See the BEIS consultation privacy notice.

Please do not send responses by post to the department at the moment as we may not be able to access them.

Documents

Published 14 June 2021
Last updated 29 April 2022 + show all updates
  1. Government response published.

  2. Summary of responses added.

  3. First published.