Under the national allocation plan, NAP, for emissions trading in the period 2005 — 2007, withholding the issue of allowances in respect of future years to companies that close will apply in respect of closures and potential closures in the two years 2005 and 2006 only, with the Exchequer benefiting from the auction of any such allowances. All elements of the emissions trading scheme and its impacts will be subject to an evaluation prior to the finalisation by June 2006 of the NAP for the Kyoto period 2008-2012.
The provision for a clawback of the free allocation of allowances to installations that close is part of the overall NAP which forms a balanced package between competitiveness and environmental protection and which is an important "learning by doing" element prior to a more rigorous allocation necessary for achieving our Kyoto target. I am satisfied that the overall balance will encourage greater efficiency and cleaner production of electricity and, therefore, a reduced greenhouse gas intensity in its production.