Firms face compulsory carbon quotas

Many of Britain’s big businesses—including supermarkets, banks, universities, hotel chains, hospitals and government departments—would be forced to sign up to a carbon trading scheme under proposals being drafted by ministers.

The scheme has received an initial enthusiastic response from some of the companies, government sources said this week, and may prove to be a central feature of a climate change Bill in the United Kingdom early next year.

The proposed system would require firms either to reduce their emissions or buy permits from other companies, giving them the right to pollute above their agreed ceiling. The plan would bind 5 000 companies and organisations not included in an European Union-wide trading scheme.

The intention is that the UK initiative would cover all organisations with annual electricity bills of more than £250 000, or with electricity consumption above 3 000 megawatts. Collectively, the firms account for annual emissions of about 15-million tonnes of carbon, more than a quarter of all UK business and public sector emissions.

The UK Environment Secretary, David Miliband, is consulting until January on whether it should be mandatory or voluntary; the government is leaning towards a mandatory scheme.

The idea is one of a number of proposals being put forward by Labour to rebut criticisms from the green lobby that the government has not done enough to combat climate change.

Chancellor of the Exchequer Gordon Brown used Wednesday’s pre-budget report to bolster his credentials in the field by announcing steeper charges for air travel and dearer petrol.

Laying out the government’s initial response to the recent Stern review, the chancellor doubled air passenger duty on flights. That will add £5 to an economy short-haul flight and £10 to a long-haul flight. Business-class travellers will see the duty on long-haul flights rise from £40 to £80. These changes will come into effect in February.

He also ended the three-year freeze on fuel duty in the face of falling oil prices and added 1,25p a litre to petrol and diesel prices.

Raising duty purely in line with inflation would have added 1,2p a litre and Brown bowed to calls from green groups such Friends of the Earth to reintroduce the “escalator”, which was used by Conservatives and Labour in the 1990s to raise fuel duty by several percentage points above inflation.

Brown extended tax relief on biofuels and announced that the vast majority of new carbon-neutral homes will be exempt from stamp duty from next year.

Green campaigners are unlikely to be overly impressed.

Friends of the Earth points out that in 1997, green taxes were 9,5% of all taxes but by 2005 it had fallen to 7,7% while, in spite of repeated government promises of substantial cuts, UK carbon dioxide emissions have risen under Labour.

The group demanded cuts in council tax (local property tax) for households that improve their energy efficiency.

It also wanted incentives for the installation for microgeneration, such as wind or solar power, and road tax of £2 000 on the most polluting cars.

“Green taxation has fallen under Gordon Brown. The chancellor must show that he is serious about tackling this issue,’’ said spokesperson Dave Timms, speaking before Brown announced the new green taxes.

Though not part of the pre-budget report, the government hopes its UK carbon trading scheme would place energy emissions at the heart of the burgeoning corporate social responsibility agenda.

It has estimated that within six years, the cost of investing in energy-saving measures would be covered by savings on energy bills.—Â

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