UK Emissions Trading Scheme: Business and Regulations Impact Assessment (BRIA)

5. Regulatory and EU Alignment Impacts

5.1 Intra-UK Trade

We do not expect these policy changes to impact on intra-UK trade as it has been produced in conjunction with the UK Government and other Devolved Administrations via the Authority. We will continue to assess the impact of these changes including unintended regional impacts and act accordingly. The upcoming phase 2 Free Allocation Review will also consider regional variations in terms of the impact of Free Allocations and how they might impact competitiveness. We will continue to assess the potential impact for Scottish businesses and intra-UK trade as part of this.

5.2 International Trade

The measures covered by this BRIA aim to incentivise business to decarbonise in a cost-efficient way, including by improving efficiency which could result in increased competitiveness in global markets. Where companies are deemed at risk of carbon leakage, they receive a proportion of their allowances for free. This will be reviewed through the upcoming second phase of the Free Allocation Review.

5.3 EU Alignment

The Scottish Government continues to favour consideration of alignment between the UK ETS and the EU ETS.