Question to the Department for Energy Security & Net Zero:

To ask the Secretary of State for Energy Security and Net Zero, if he will make an estimate of the cost to the public purse of providing free carbon allowances to businesses that have ceased operations in the last 12 months.

UK Emissions Trading Scheme (UK ETS) allowances are given for free to eligible industrial operators at risk of carbon leakage. In the year after activity is permanently ceased, these free allowances are no longer distributed. However, operators retain free allowances to which they were entitled in the final year they operate, as they will still have a carbon leakage exposure which must be mitigated.

Nine UK ETS operators permanently ceased operations by the end of the 2022 scheme year, and were allocated 623,241 allowances in that year, worth c.£49M at 2022 average UK allowances prices.