Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of the benefits of a linked UK ETS.

Carbon pricing policies that work using the cap-and-trade principle, such as the UK Emissions Trading Scheme (ETS), can deliver cost-effective decarbonisation, as they incentivise abatement to occur where and when it is cheapest. In principle, larger carbon markets lead to more cost-effective emission reductions, since emission allowances are tradable across a larger and more diverse pool of participants.

Linking carbon markets would also lead towards an alignment of carbon prices across the linked schemes. This can minimise the risk of any competitive distortions that may have resulted from unevenly applied carbon prices.