Question

To ask the Secretary of State for Business, Innovation and Skills, what estimate he has made of the level of compensation that will be available for eligible companies for the indirect costs of (a) the EU Emissions Trading System and (b) the carbon price floor in each year from 2016-17 to 2019-20.

When initially estimating the overall budget for the compensation schemes for EU Emission Trading System (EU ETS) and the carbon floor price, a sector level approach was taken using ONS data on electricity consumption to estimate the total coverage and eligibility. At that time, it could not be assessed on a business by business basis.

To date we have paid £45.7 million to 54 electricity-intensive businesses that operate in international markets to compensate for the indirect costs of the EU ETS.

Of the 54 companies we have also paid £21.9 million to 52 of them for the cost of the carbon price support mechanism.

The average compensation per eligible business to date is therefore approximately £1.25 million. However, there is considerable variance in the size of payments.

In any given calendar or financial year from 2016 to 2020 the level of compensation is estimated to be:

a) circa £20 million for EU ETS;

b) circa £70 million for carbon price support.

The overall cost of EU ETS compensation in the future depends on a number of variables including the EU carbon price, which will vary from year to year.