Gordon Green?

Yesterday’s speech by Gordon Brown was his first on environmental issues since becoming Prime Minister. The main points were his commitment to the carbon bill which he inherited, and to the UK meeting its share of the EU target to generate 20% of Europe’s power from renewable sources by 2020.

As expected the speech was full of platitudes to vision, and the penchant for declaring the UK to be at the forefront of the “fourth technological revolution”, London to be the self-evident centre for global carbon trading, and calling on Johnny Foreigner to jolly well catch up (which may be seen to be good for domestic politics, although goodness knows why, but must rankle with everyone else). Equally the speech was short on any immediate policy shifts or practical steps.

But this is not to deny the significance of the carbon bill. The first draft was published in March 2007, and was introduced to Parliament on November 14th 2007 following parliamentary and public consultations. When passed the law would aim to make the UK a low-carbon based economy. The draft bill includes a timetable for mandatory cuts in targeted greenhouse gas emissions, based upon binding domestic carbon reduction targets, 5-yearly carbon budgets, and annual progress reports to Parliament. The longer-term target is a 60% reduction – based on 1990 levels – in carbon emissions by 2050, and the more immediate target (described rightly by Polly Toynbee in The Guardian as “eye-wateringly tight”) for a reduction of between 26-32% by 2020.

How is this to be achieved? There are two main elements – pace the Stern Report – technology and pricing: energy efficiency will be important (if backed for example by mandatory emission targets for vehicles, power stations, etc.), changing the energy mix (hence the emphasis on renewable sources and recycling, but the nuclear option remains one of the elephants in the room), and carbon pricing.

Carbon emissions trading, such as the EU Emissions Trading Scheme, is essentially a business carbon tax (without the public revenues). The big political decision will be to extend such schemes (tradable energy quotas) to individual carbon allowances (i.e.rationing) for the consumption of the main types of fossil fuel (electricity, gas, petrol, flying), and to substitute green consumer taxes for VAT and income taxes. Those with lower emissions could trade the unused part of their personal carbon credit – which could have a income redistribution effect (if this income is not taxed… ), a concept flagged by David Milliband, the then Environment Minister.

The bill’s targets are UK-based, but at present the bill also includes the provision that emission reductions “purchased overseas” may be counted towards UK targets (Schedule 2 Trading Schemes Part 1, 11 (1) (b): “units under any other trading scheme … relating to greenhouse gas emissions”) which leaves the door wide open for forestry.

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