A report commissioned by the UK prime minister has come down in favour of carbon trading, rather than a carbon tax, as vital in combating climate change. However, carbon trading would not be enough by itself, the report said. Domestic action was also required.
The UK Low Carbon Transition Plan, the UK government's so-called 'route map to a low carbon country' does not include a defined tax strategy to deal with the costs that will be required, even though environmental policy specialists believe that one must be an important part of any plan.
The document says the government will continue to develop the North Sea oil and gas tax regime 'to offer the right incentives for new investment'; it discusses the climate change levy, introduced in 2001 to encourage companies to use energy more efficiently, and climate change agreements, which allow companies obtain CCL discounts in exchange for practising energy efficiency.
The government believes transport taxes, such as fuel duty, will also be important in the fight against climate change as they can raise money to pay for public services, as well as encourage fuel-efficient behaviour. The role of policies such as R&D tax relief and landfill tax were also covered in the document which was released on July 15 by the Department of Energy and Climate Changehttp://www.decc.gov.uk/default.aspx.
The absence of a commitment in the document to environmental tax reform came as one of Europe's leading environment specialists said there now existed the best opportunity to introduce ETR. David Gee of the European Environment Agency told a conference in London that the climate change crisis, better research knowledge, the decline of a free market ideology and an ecosystems crisis meant that the conditions were now right for ETR.
