The transition to net zero is often framed as a cost to society and communities. In reality, for Wales, it is one of the greatest economic opportunities of the 21st century. Wales begins this transition from a distinctive position. Its industrial heritage, energy-intensive sectors and manufacturing base mean that per capita emissions are still significantly higher than the UK average, despite the substantial reduction that Wales has seen in emissions since 1990, mainly achieved by the closing of industrial plants. To meet the legally binding net zero targets set by the UK government, between 2020 and 2050, each person in the UK must reduce their emissions by around 125 tonnes of CO₂ per year. In Wales, this figure is on average 225 tonnes per person, almost double the UK requirement.  The challenge is therefore significant for Wales but also presents extraordinary opportunities. Using HM Treasury Green Book values and published decarbonisation pathways, one can quantify the social value of making this economic opportunity a reality. For the UK, the average annual social value is estimated at £93.7 billion (around 5% of 2020 GVA). For Wales, it is £7.6 billion per year - equivalent to roughly 11% of Wales’ 2020 GVA. The social value of industrial decarbonisation alone could contribute £2.7 billion annually (around 4% of the nation's GVA).  Per person, the social value of industrial decarbonisation in Wales is at least two times the UK average. This reflects both the scale of Wales’ industrial base and the depth of the transformation required. In short: Wales has more to do, but also more to gain. Therefore, any UK government financial support reserved to help industry decarbonise should be at least double its population equivalent. In reality, however, Welsh industry currently receives significantly less than its population share.  The barrier to unlocking the greatest economic opportunities of the 21st century is not ambition, nor a lack of projects that represent value for money. It is the infrastructure and the financial support needed to enable investment in Welsh low-carbon energy infrastructure. Slow investment in Welsh electricity networks, leading to grid constraints, limited network reach into rural areas, and an inability to meet the strategic need for new hydrogen and carbon capture and storage (CCS) infrastructure is already slowing progress. Anticipatory investment, building capacity ahead of demand, is essential to unlock low-carbon electricity generation and industrial decarbonisation through electrification, hydrogen and CCS deployment. The Clean Energy Investment Prospectus for Wales highlights a pipeline of investable projects that could transform Wales into a clean energy powerhouse, whilst remaining a cornerstone of the UK industrial base, producing sustainable goods and services.   Collectively, renewables and decarbonisation projects are expected to generate £9 billion in GVA over the next decade. Wales also benefits from Freeports, Investment Zones, AI Growth Zones and a supportive regulatory environment underpinned by the Well-being of Future Generations Act. The case for investment is strong. But funding, including HM Treasury support, must match the scale of opportunity.

"Collectively, renewables and decarbonisation projects are expected to generate £9 billion in GVA over the next decade."

The UK Emissions Trading Scheme (UK-ETS) generated £17.8 billion in auction revenues between 2021 and 2025, as reported by the UK National Audit Office. Unlike the EU scheme, where members states are encouraged to use at least 50% of the revenue to support industrial decarbonisation, there is no legal requirement for HM Treasury to reinvest a minimum proportion of UK-ETS revenues for that purpose, eventhough 10-15% of the verified UK-ETS emissions originate from Wales.  At the same time, the majority of funding allocated by HM Treasury, within the UK Industrial Strategy, to deploy low carbon infrastructure mainly benefits the North of England and Scotland, with only a small proportion benefiting Wales and being significantly less than its population equivalent.  Wales and its industry therefore contribute disproportionately to the scheme - around two to three times its population equivalence - but receive significantly less than that share in return. This significant gap creates an ’unjust’ transition and sends the message to Welsh industries that the UK-ETS is ’just another tax’. This makes their operations even less competitive when compared to other plants and organisations in their sector and therefore creates an uneven playing field.  To enable a just transition, Wales should therefore benefit proportionately, i.e., equivalent to its emission burden (its fair share) from the recycling of UK-ETS revenue to support low-carbon energy infrastructure investment and the decarbonisation of Welsh industries.  Wales has the natural resources, industrial...