The UK government spent nearly £150 million in one year compensating businesses for higher electricity bills caused by the UK Emissions Trading Scheme (ETS). Paper companies received the largest share at £50.3 million, followed by iron and steel at £42 million, chemicals at £35.7 million, and non-ferrous metals at £6.3 million. The scheme is designed to prevent carbon leakage, where domestic firms move overseas to avoid carbon costs, but critics call it a taxpayer handout that blunts the incentive to decarbonize. Shadow Energy Secretary Andrew Bowie labeled the policy 'total madness,' arguing the government taxes carbon, pushes up energy bills for households and businesses, then subsidizes industries that struggle to pay. The government defends the ETS as a driver of green investment and insists the compensation keeps industry competitive while cutting fossil fuel dependence. The debate highlights a core tension in carbon pricing: how to protect trade-exposed sectors without undermining the price signal that is supposed to reduce emissions.
