December 2003

Chancellor Promises Help For a Greener Britain

The UK is to let companies that have won tax breaks in exchange for reducing emissions, to keep the incentive if they enter the EU Emissions Trading Scheme (ETS). The intention is to avoid hundreds of companies from opting out of the EU Scheme.

The announcement came as part of the Chancellor's Pre-Budget report which was published on December 10th . The UK is expected to account for around 1,700 of the installations in the EU scheme but this figure could be halved, if many companies choose to opt out.

One of the main tools of climate change abatement has been the use of Climate Change Levy Agreements (CCLA), which tie reductions in the climate change levy to negotiated agreements, and which have already delivered substantial carbon savings. Taking account of this, the Government has decided to create a level playing field between CCLA's and the EU ETS, and will introduce the equivalent CCL discount for those installations in CCLA's, who would like to enter into the EU ETS instead, once the scheme is up and running.

John Healey, the Economic Secretary to the Treasury said

"This Pre-Budget Report is good news for the environment and good news for business. It will help deliver sustainable growth and a better quality of life for all. Our framework on green fuels puts the environment and business certainty at the heart of a coherent and radical policy on fuel duty discounts. Plans on the aggregates levy in Northern Ireland and reforms to the Climate Change Levy will increase the environmental gains from these schemes while increasing business competitiveness. At the EU level, the new Emissions Trading Scheme is going to be a huge step forward in tackling climate change across Europe."

The government also intends to increase the coverage of climate change agreements by expanding the criteria. Companies that want to negotiate a voluntary emissions reduction target must meet a new energy-intensity threshold to qualify. The government also wants to reform the tax regime for transport fuels, phasing out support for liquefied petroleum gas, while bringing in support for natural gas vehicles.

The report contains many other interesting proposals for improvements to green initiatives in the coming months. If you would like to discuss how this may affect your business please contact Darren McNulty on 024 7627 9007.