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Last Updated: Wednesday, 22 March 2006, 16:07 GMT
Brown targets polluting vehicles
Gordon Brown with his 2006 Budget

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The chancellor is to raise taxes for "gas-guzzling" vehicles, with the worst offenders now attracting a vehicle excise duty of 210.

The move has been coupled with a zero rate for a small number of cars with the lowest carbon emissions, and 40 duty for cars with low emissions.

The RAC had said it would back a new rate for cars creating more than 250 grams of carbon dioxide per kilometre.

Mr Brown also said the climate change levy would remain in place.

'Reducing emissions'

The chancellor said the climate change levy, the resulting climate change agreements and the carbon trust funded by it, had "cut carbon emissions by a total of over 28 million tonnes".

Find out if you are affected by the changes

He said that in each of the coming five years, these climate change measures would cut emissions by more than six million tonnes, accounting by 2010 for 40% of the UK's total carbon reductions.

"Because of the climate change levy, over 10,000 businesses have signed climate change agreements," the chancellor said.

He said under the carbon trust - funded by the levy - 3,000 businesses had reduced their emissions.

'Cutting edge'

He also said that following recent discussions, some of the world's biggest energy companies had agreed to work in partnership to create a new energy and environmental research institute for the UK.

What do people in Chelsea think of the tax on "gas-guzzling" cars?

Mr Brown said it would be at "the cutting edge of science and engineering". The aim, he said, was that public and private sectors would together raise finance of 1bn.

The chancellor also announced new measures to undertake "carbon capture and storage in the North Sea" to try to reduce carbon emissions from power stations by up to 90%.

"So we are today publishing proposals for industry-wide consultation to move this important environmental advance from research to commercial development," he said.

Bio-fuels target

However, environmentalists will have been disappointed that the chancellor said there would be a further freeze on fuel duty until September and that air passenger tax would be unchanged.

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Before the Budget, pressure group Friends of the Earth had said that any small increase in vehicle tax for gas guzzlers would be "unlikely to persuade people to drive greener cars".

It had called for the most polluting vehicles to pay at least 600 a year; and Greenpeace also said the 210 rate was too low.

But Mr Brown said the number of motorists now paying the lower rates of 100 or less would increase from 300,000 to three million.

The new top rate of vehicle excise duty will hit the most polluting new cars - affecting 1% of vehicles on the road.

The Department of Transport says only two cars will qualify for the zero rate of duty - the Honda Insight petrol-electric hybrid, which Honda UK says has been discontinued in the UK for two years now, and the Smart diesel.

Find out if you are affected by the changes

The Toyota Prius - perhaps the best-known hybrid model, is in Band B, which is subject to a 40 Vehicle Excise Duty bill.

The chancellor also said that to further reduce carbon emissions, 5% of fuel should be made from bio-fuels by 2010.

'Right direction'

Greenpeace executive director Stephen Tindale said many of the measures would make a difference if properly implemented.

But he added: "The real test for Brown comes next month when the government has to decide how much carbon British industry is allowed to emit.

"The measures on energy efficiency and micro-generation are very positive and will help bring forward low-carbon buildings and a decentralised energy system."

The Energy Saving Trust said it was "very pleased" with the budget, particularly with regard to energy efficiency and clean fuel transport.

Chief executive Phillip Sellwood said: "At last they have recognised they had to do something to get people into more fuel efficient cars.

"We also welcome the investment in micro-generation."

And Guy Thompson, director of the environmental think tank Green Alliance, said: "Gordon Brown has set the right direction of travel on climate change and these measures signal intent to start changing behaviour at a household level.

"He now needs to take the next logical step and champion the supply-side measures that the government needs to take to reduce carbon in the energy review."

However, he was disappointed the budget did not address water efficiency issues. Much of the UK is facing water shortages as a result of lower-than-average rainfall and pipe leakage.

How Gordon Brown's measures could help the environment

What do you think of Budget 2006?
22 Mar 06 |  Have Your Say

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