Greenhouse Task Force recommends taxation and trading

Lord Marshall's Task Force on the use of economic instruments in UK's climate change strategy has recommended the use of both emissions trading and energy taxation, to involve all sectors of the economy in meeting climate change commitments.

“All sectors of the economy – business, domestic and transport – will need to play their part in meeting our climate change commitments; the Government needs to look beyond the current targets agreed at Kyoto, and provide clear, long-term signals to reduce emissions;- a mixed approach, using a number of different measures, will be necessary,” states Lord Marshall’s report ‘Economic Instruments and the Business Use of Energy‘.

Lord Marshall recognised the role to be played by an emissions trading scheme, given a robust system of monitoring and verification, and suggested that the government set-up a ‘dry-run pilot’ as soon as possible.

However, Marshall points out that SMEs account for some 60 percent of CO2 emissions, and that it is unlikely that they will be able to get involved in emissions trading in practical terms.

Hence, he concluded “there probably is a role for a tax if businesses of all sizes and from all sectors are to contribute to improved energy efficiency and help meet the UK’s emissions targets.” The report recommends a clear signal of long-term policy, with changes in tax made in a gradual and predictable way. Revenues should be recycled in full to business, “with at least some of the revenues channelled into schemes aimed directly at promoting energy efficiency and reducing greenhouse gas emissions – perhaps through ‘carbon trust’ type schemes to promote low carbon technologies, and/or energy audits/advice for SMEs”, says Marshall.

Chancellor Gordon Brown welcomed the report, and said the government would consider the recommendations very carefully in developing its strategy on climate change.

Follow the link below for the full report

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