UK Phase 2 Emissions Cap targets power sector

Electricity consumers are expected to bear much of the cost of the reduction of the UK’s CO2 emissions in Phase 2 (2008-2012) of the EU Emissions Trading Scheme (EU ETS). The UK Environment Secretary, David Miliband, announced on 29 June 2006 the cap on the annual carbon dioxide allowances that will be set under the UK's National Allocation Plan (NAP) for Phase 2. This cap will be set at 238 million allowances per year, which represents an annual reduction of 29.3 million tonnes of CO2 against projected business as usual emissions. The UK Government anticipates that its NAP for Phase 2 will result in an increase in electricity prices of approximately 1% for industrial users and 0.5% for domestic users.