Financial Assistance to Industry — Authorisation of Payments To Compensate for Indirect Costs of the UK Emissions Trading System or the Carbon Emissions Tax and Carbon Price Support Mechanism — 8 Dec 2020 at 17:19

The majority of MPs voted to authorise payments to industrial companies to compensate them for indirect costs of the UK Emissions Trading System or the Carbon Emissions Tax and Carbon Price Support mechanism.

The stated policy aim was set out in committee the day before the vote as being "to ensure that manufacturing was able to remain competitive during the shift to a low-carbon economy and to minimise carbon leakage"^[1].

Carbon leakage was described as including the situation where "for reasons of cost related to climate policies, businesses were to transfer production or reallocate investment to other countries that have lower carbon pricing policies. That could lead to an increase in global greenhouse gas emissions".^[1]

The motion supported by the majority of MPs in this vote was:

• That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, sums exceeding £30 million and up to a total of £300 million in respect of compensation for indirect costs of the UK Emissions Trading System or the Carbon Emissions Tax and Carbon Price Support mechanism in each case to British Steel Ltd; Celsa Manufacturing (UK) Ltd; CF Fertilisers UK Ltd; DS Smith Paper Ltd; INEOS Chemical Grangemouth Ltd; INEOS ChlorVinyls Ltd; Kimberly Clark Ltd; Outokumpu Stainless Ltd; Palm Paper Ltd; Runcorn MCP Ltd; SABIC UK Petrochemicals Ltd; Tata Steel UK Ltd; and UPM-Kymmene (UK) Ltd.

[As for determining if those voting for this motion are voting to reduce emissions (and tackle climate change), this is a difficult judgment. It appears that to reduce emissions carbon taxes need to be optimised such that they are high enough to deter, and reduce emissions, but also not so high that they make shifting activity to less regulated countries an attractive option which could result in higher emissions. Those voting for this motion enabled such optimisation of effective carbon tax rates. However one could make the case that those voting for the motion enabled the reduction of effective carbon tax rates, reducing the financial consequences of carbon emissions. A view is currently not taken either way on the impact of this motion on emissions, and climate change, as the detail of how the powers are used is key and the motion is not specific on that point.]

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• [1] House of Commons Official Record, Delegated Legislation Committee, Monday 7 December 2020, Parliament.uk

Debate in Parliament |