Pollution commission recommends carbon tax to replace climate levy

The Royal Commission on Environmental Pollution is pressing the government to impose a carbon tax on consumers and companies to reduce CO2 pollution, in place of the climate change levy.

“The carbon tax would be a better instrument than the climate change levy that the government plans to introduce next April,’ said RCEP chairman Sir Tom Blundell (see related story).

The commission called for a 60% reduction in CO2 emissions over the next 50 years, and expressed doubts about the government’s plan to reduce carbon dioxide emissions by 20% within the next 10 years.

Commission member Professor Richard Macrory, of the University of Reading, said: “Frankly, we think that as (the government’s plan) now stands it falls some way short of delivering the 20% target.’ He said that lack of coordination between government departments was hindering progress. ‘They are not all singing from the same hymn sheet. We need energy and environmental targets that are more ambitious.”

The commission warned that if carbon dioxide emissions were not reduced the world could face an environmental disaster. To reduce emissions, it highlighted a key set of recommendations from its full list of 87. These include the creation of a Sustainable Energy Agency to promote energy efficiency; quadrupling government support for energy-related R&D; and exploring alternative energy resources such as hydro power, tidal barrages, winds, waves, solar and non-fossil fuels.

Environment Minister Michael Meacher praised the RCEP’s CO2 warnings while avoiding comment on the implications for the climate change levy. He said: ‘The RCEP is right to highlight how enormous the challenge of climate change really is. We must rise to this, but cannot do so alone. The targets agreed at Kyoto are an essential first step and show that the international community is taking the problem seriously. And we have shown that the UK is prepared to go even further, through our domestic goal of cutting emissions by 20% by 2010.

‘But in the longer term, the RCEP report highlights the need for making even deeper cuts in emissions, and some of the challenges this presents, particularly for energy policy. Our draft Climate Change Programme, published in March, aims to put us on the right path to this lower carbon future.

DETR is currently assessing the 270-plus responses to its draft programme, and will publish the final programme this autumn. Meacher added: “We welcome the RCEP’s contribution to the discussion on climate change and its valuable focus on the long term. None of us can afford to underestimate the challenge that lies ahead.’

Industry response to the proposal has been mixed. Water UK, the trade body for the water industry, has campaigned to be included in the list of industries receiving climate change levy discounts, but has so far failed to convince Government. The industry remains unconvinced that a different form of taxation would bring any benefits. A spokesman said: ‘It would depend on the implementation – a carbon tax could equally have exemptions for particular sectors.”

The Institute for Wastes Management has put the RCEP report summary on its website to elicit responses from members, and a spokesman says the organisation will make a fuller response when the complete report is available.

The CBI reacted more positively to the news. Senior policy advisor Richard Jackson said: “We don’t think the climate change levy itself is a very well designed tax because it doesn’t implicitly tackle climate change. A carbon tax has a logic which we would support and is far better than the climate change levy, but we still believe that emissions trading is a more flexible, least cost way of reducing carbon levels. It is the optimal out of the policy tools available.”

Michael Johnston, energy campaigner for Friends of The Earth, says that although the Royal Commission report was “pretty much spot on” existing fuel poverty must be tackled before a carbon tax can become viable. In the longer term a carbon tax is essential. In the shorter term the climate change levy is the best thing to do.”

He added that the Warm Homes Bill currently going through Parliament would be a “very clear instrument” to deal with fuel poverty – ending the inability of the poor to pay existing fuel bills. “When the bill delivers, we can move from the pragmatic to the principle and introduce a Carbon Tax.”

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