The scale of the payouts
Nearly £150 million was handed out in a single year to compensate energy-intensive industries for higher electricity costs under the UK Emissions Trading Scheme. Paper makers received the largest share at £50.3 million, followed by iron and steel at £42 million and chemicals at £35.7 million. The scheme aims to protect these sectors from overseas rivals facing weaker carbon rules.
Opposition criticism
Shadow Energy Secretary Andrew Bowie called the arrangement "total madness", stating: "The Government is choosing to impose a carbon tax that pushes up electricity bills for struggling households and businesses; then it is turning to the taxpayer-funded handouts to subsidise industries that can’t afford to pay their bills". Ineos boss Sir Jim Ratcliffe described carbon taxation as "the most idiotic tax in the world".
Indirect effects on household bills
Households do not pay the carbon price directly, yet the costs faced by power generators are passed through wholesale prices and into the tariffs suppliers offer. This means ETS allowance prices can contribute to the overall cost of electricity for homes. A government spokesperson defended the scheme, saying it drives green investment while the compensation helps keep UK industry competitive.
Practical steps for your own costs
Although direct compensation is not available to households, schemes such as the Warm Home Discount, Boiler Upgrade Scheme and Great British Insulation Scheme offer support. We recommend comparing tariffs regularly on our energy comparison pages to keep bills in check amid these wholesale pressures.
