UK Emissions Trading Scheme: free allocation review - carbon leakage
The UK ETS Authority is seeking views on using the Carbon Leakage List to determine UK ETS free allocation eligibility, and proposals for free allocation adjustment for sectors covered by the UK Carbon Border Adjustment Mechanism.
The UK ETS Authority is seeking views on a number of proposals to improve our approach to Free Allocations, specifically:
- the approach to calculating the Carbon Leakage Indicator and setting the Carbon Leakage List
- the approach to adjusting Free Allocations for Carbon Border Adjustment Mechanism (CBAM) sectors
This is an interim consultation following the 2023 UK ETS Free Allocation Review consultation where the Authority committed to publish a draft UK Carbon Leakage List and put forward further options on free allocation adjustments for CBAM sectors. The Authority has used responses from that 2023 consultation to form these new proposals, and has included a summary of those responses in this consultation document.
This consultation will be of particular interest to:
- individual companies
- representatives of industrial and power sectors with obligations under the UK ETS
- environmental groups
It is not limited to these groups though - any organisation or individual is welcome to respond.
The consultation is supported by a NERA Technical Report on Carbon Leakage Indicators and an Analytical Annex on the Free Allocation adjustments for CBAM sectors.