§ Mr. Stephen O'BrienTo ask the Secretary of State for Trade and Industry what formal assessment she has made of the(a) effect on the competiveness of UK industry, (b) the cost to UK consumers and (c) the incentives for UK industry to cut carbon emissions of the proposals for allocating national allowances under the EU Emissions Trading Scheme recently approved by the EU Commission. [185504]
§ Mr. TimmsThe Department has undertaken extensive analysis of the implications of the EU Emissions Trading Scheme for UK industry and758W consumers. A paper on the implications for UK competitiveness is available at: www.dti.gov.uk/energy/ sepn/euetsimplications.pdf
Work on the implications of the scheme for electricity prices was undertaken for the Department by ILEX Energy Consulting and is available at www.dti.gov.uk/ energy/sepn/ilex_report.pdf. ILEX are currently expanding this work, including to give some consideration to the implications of the National Allocation Plans from individual member states.
At a carbon price of ¬5 per tonne of carbon dioxide the Department estimates that electricity prices to industry might increase by around 6 per cent. and prices to the domestic consumer by around 3 per cent. A carbon price of ¬5 is estimated to lead to a reduction in carbon dioxide emissions of around IMtC in 2010. A carbon price of ¬10 may lead to more than double this level of reduction. These results are sensitive to assumed fossil fuel prices and the fuel mix in generation in 2010.