Compensation for the indirect costs of the Carbon Price Floor and EU Emissions Trading Scheme (ETS) - call for evidence
Open date: 12 Mar 2012
Closing date: 04 May 2012
Call for evidence - Indirect costs of the Carbon Price Floor and EU ETS
This call for evidence should enable us to update the information we have on the electricity intensity of different sectors, and how these policies impact on their competitiveness.
In order for the UK to ensure value for money and ‘additionality’ for any aid provided for carbon costs we will need to consider and demonstrate that any compensation addresses the following issues:
- Necessity - why is aid needed? What common EU objective is being addressed?
- What is the incentive effect - will aid genuinely change the behaviour of businesses? The UK will have to satisfy the Commission that there is a real risk of carbon leakage without the aid.
- Proportionality - aid generally must be limited to the minimum amount necessary, and aid of this sort is usually only considered proportional where there is a continued incentive to improve environmental performance. This may be done by ensuring that the beneficiary still pays a proportion of the tax or by including some environmental conditionality.
- Distortions to competition and trade – the UK will need to analyse the impacts on all potentially affected markets and demonstrate that the competitiveness of companies in other markets or other Member States is not unduly affected.
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