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Last Updated: Thursday, 1 June 2006, 21:50 GMT 22:50 UK
Real changes need real incentives
Chris Huhne
Chris Huhne

A fundamental change in how we tackle climate change needs to be made, says Liberal Democrat Shadow Environment Secretary Chris Huhne. In this week's Green Room, he argues that financial incentives may be the answer.

Cars (Getty Images)
We have proposed a fundamental change of approach that would tackle the problem head on

The Liberal Democrats have always placed the environment at the heart of our thinking.

Climate change presents the greatest challenge of our time to policy makers, not only in the UK, but internationally.

We recognise that to tackle climate change we must cut our carbon emissions and provide international leadership.

However, at the moment, the government is failing to achieve either of these goals.

A significant change in behaviour is required if we are to cut our carbon emissions and ensure we reach the target of a 60% reduction by 2050.

Emissions from road transport and aviation are growing at an unsustainable rate and it is essential that we tackle the gross inefficiency of electricity generation.

We have proposed a fundamental change of approach that would see the government tackle the problem head on, rather than relying on grand rhetoric and international publicity stunts.

Gas-guzzler penalties

The Liberal Democrats are the only party to have grasped that providing financial incentives will encourage sustainable behaviour.

4x4 (PA)
Gas-guzzling vehicles would pay significantly more than smaller vehicles with low emissions

CO2 emissions in the UK have been rising as green taxes have been falling as a proportion of GDP.

We have proposed a "Green Tax Switch" which would see taxes shifted from activities we should support, such as employment and work, to unsustainable polluting behaviour.

The Liberal Democrats would combine cuts in personal taxation with increases in Vehicle Excise Duty (VED) so that gas-guzzling vehicles would pay significantly more than smaller vehicles with low emissions.

This policy would introduce a top rate of VED of 2,000 for heavily polluting, newly purchased vehicles.

Those in rural areas who rely on their cars, as there is little public transport, would be protected by a 50% discount in all but the top band of VED.

Research by the Energy Saving Trust (EST) shows that this pattern of incentives would encourage two-thirds of car buyers to opt for lower-emitting vehicles, gradually changing our car stock.

By introducing this policy, we could create a significant step change towards more sustainable behaviour.

This policy would not prevent people from purchasing any particular type of vehicle.

Aircraft emissions

However, in order to accelerate our progress in this area, we need a package of measures to cut carbon emissions.

Fuel duty must also be maintained in real terms, rising in line with inflation.

House build (Getty Images)
Even our new homes are being built to a standard that uses 65% more energy than new homes in Sweden

We would also seek to extend the climate change levy and restructure it so it forms a carbon tax across the economy.

In addition, the Liberal Democrats propose taxing the emissions of each aircraft flight, rather than individual passengers, as at present. As a result, we would reward full flights and penalise half-empty ones.

By 2050 our present levels of energy inefficiency and consumption will seem astonishingly wasteful.

Energy efficiency measures and decentralised power are the keys to reinventing the UK's electricity network.

The energy efficiency of our housing stock is a disgrace and current schemes in place to address this problem are not fit for purpose.

Even our new homes are being built to a standard that uses 65% more energy than new homes in Sweden. And those UK homes rely on power generated by wasteful fossil fuel power plants which transmit electricity over long distances, thus losing as much as two-thirds of the energy in the process.

'Reaping rewards'

We need a radical process of integrating energy efficiency measures with a decentralised network of energy production.

Britain has the best resources for the production of clean, renewable energy in Europe, but we are not reaping the benefit of our natural advantage.

Our Green Tax Switch proposals outlined the Liberal Democrats' belief that "cap and trade" schemes like the EU Emissions Trading Scheme (ETS) are potentially the most effective way of influencing behaviour, as they provide a benefit to participants who reduce their emissions below their entitlement.

By selling their surplus permits, they can reap a direct reward.

In order to maintain incentives under the EU ETS, however, there must be a significant price for carbon, and recent developments that have seen the price per tonne fall are worrying.

Windfarm (PA_
Climate Change is a real threat but it is also a great opportunity... We can generate electricity by clean and sustainable methods.

We believe the best means of ensuring an incentive is the reduction of allocations across EU member states, and the auction by national governments of the maximum 10% of permits allowed under the scheme from 2011.

The UK, instead of seeking a loosening of the ETS national allocation, should be looking to tighten it up.

The ETS is an excellent mechanism, but it does not cover the 22% of emissions from road transport nor aviation.

We have to continue to act on the other half of the UK's emissions, and we should try to use pricing mechanisms precisely because of the same advantage as the ETS: they price out the marginal uses of emissions.

Beyond Kyoto

That is why the Liberal Democrats are the only mainstream political party to have bitten the bullet on the use of green taxes to help change our behaviour.

Britain and the EU must take the lead on negotiations for the next set of targets for greenhouse gas emissions.

Our long-term goal is "contraction and convergence" - which means agreeing for every country a sustainable population-related allowance for emissions.

Both by itself and as part of the EU, the UK can play an important role in demonstrating to the rest of the world that it is possible to meet and exceed Kyoto targets.

The Kyoto Protocol, which came into force in February 2005, sets the global framework for controlling greenhouse gas emissions. It will be important to see the protocol develop new mechanisms, including a global system of emissions trading, as fast as possible.

Preparations also need to be made for the longer-term development of the protocol, beyond the first commitment period of 2008-12.

Liberal Democrats argue for further and more ambitious emissions reductions targets to be agreed for the second and subsequent commitment periods, based on the principle of contraction and convergence with the long-term goal of equalising per capita emissions across the world.

Life will change as a result of climate change and, in turn, our lifestyles will change.

Climate change is a real threat but it is also a great opportunity. We can make our homes and appliances more energy efficient.

We can make our cars cleaner. We can generate electricity by clean and sustainable methods.

The challenge for political parties is to be brave enough to implement the policies that will allow us to achieve this.

The Liberal Democrats are the only party who are willing to accept the challenge.

Chris Huhne is Shadow Environment Secretary for the Liberal Democrats

The Green Room is running a series of articles from the environment spokespersons of the three main political parties in the UK.

The Green Room is a series of opinion pieces on environmental issues running weekly on the BBC news website

Do you agree with Chris Huhne? Should tax be used to change behaviour? What about energy efficiency? Should the UK take a lead on climate change? Send us your comment using the link below.

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