Question to the Department for Energy Security & Net Zero:

To ask the Secretary of State for Energy Security and Net Zero, what assessment he has made of the adequacy of the data set used to analyse carbon leakage assessments in the recent consultation on free allocation review for the UK Emissions Trading System.

The provision of Free Allocation under the UK Emissions Trading Scheme (UK ETS) mitigates the risk of carbon leakage by reducing industrial sectors’ exposure to the carbon price.

The UK ETS Authority is reviewing Free Allocation policy to ensure it targets sectors most at risk of carbon leakage and consulted on its approach to carbon leakage assessment. DESNZ officials have engaged extensively with representatives from energy intensive industries and carefully considered the methodology used to determine carbon leakage risk, including the data sets used in calculations.

The outcomes of the Free Allocation Review, including the data used to assess carbon leakage, will be published in an upcoming Government Response accompanied by an Impact Assessment.