§ Miss McIntoshTo ask the Secretary of State for Trade and Industry what assessment she has made of the impact which the UK National Allocation Plan will have on the competitiveness of UK industry. [178483]
§ Mr. TimmsThe UK has set out to implement the EU ETS in a way that meets the twin goals of maintaining UK industry's competitiveness, while maintaining commitment to our environmental goals. As the EU ETS is a new instrument, and, before the start of the first Phase, there remain great uncertainties as to what the EU allowance price may be, detailed analysis of the potential impact on the UK of the scheme was necessary to inform our decisions on implementation. An additional and crucial uncertainty has been how other member states will implement the scheme.
The DTI published an analytical paper on the impact of the EU ETS on UK industry, examining in particular the trading patterns of EU ETS sectors and possible regional dimensions to the impacts. This is available on the DTI website at www.dti.gsi.gov.uk/energy/sepn/euets.shtml. in addition, we commissioned ILEX Energy consultants to examine the possible impact on electricity prices of differing EU allowance prices and the impact on power sector investment. This paper is available on the DTI website, as above. Further work has been commissioned to examine the cross EU impacts on power prices.
This analysis informed the decision for the UK to allocate allowances equal to estimates of what sectors will require in the 2005–07 period under 'with measures' projections. This is to ensure that EU ETS will not impose a reduction in emissions beyond what is expected given current measures. The exception to this is electricity generation, which due to the very limited international competition that the industry faces, has been allocated a reduction below 'with measures' projections in the 2005–07 period.
When the Commission's assessment and decisions on all NAPs have been made, a more informed assessment of the impact of EU ETS on UK industry will be possible.
§ Miss McIntoshTo ask the Secretary of State for Trade and Industry what assessment she has made of the impact on UK competitiveness of the national allocation plans of other EU member states; and if she will make a statement. [178485]
§ Mr. TimmsThe UK has closely followed the publication of other member states National Allocation Plans (NAPs), and, has actively called for robust and consistent review by the Commission. The need for the Commission to ensure there is consistent adherence to the principles of the Directive's rules for allocation in each NAP, as well as an assessment of possible State Aid implications from allocation, is crucial to ensure that there is minimal distortion of competition between the EU member states.
The Commission has yet to make final decisions on the 14 NAPs submitted to date, so no detailed assessment of the competition implications for the UK 1076W can be made. However, ECOFYS consultancy has been commissioned to analyse key aspects of other member states NAPs that are published, which inform UK comments in the peer review process of NAPs. We will continue to work with the Commission to highlight where clear distortions of competition arise from implementation and breaches of the directive establishing the EU Emissions Trading Scheme.