Environmental Audit Committee



Budget 2004 and Energy

The Environmental Audit Committee published today its Tenth Report of Session 2003-04, Budget 2004 and Energy, HC 490.  

Key points in the Report:

· The Government's  Climate Change Strategy is seriously off course; and current policies have yet to make a significant impact on UK carbon emissions;

· A more imaginative and radical strategy - in particular for transport and domestic energy efficiency - is needed;

· The Treasury cannot expect industry to provide investment in alternative fuels unless it has a long term strategy itself;

· Politicians have failed to make the case for the environmental benefits of taxing fuel, and despite recent oil price rises, petrol is still at least 10% cheaper than four years ago in real terms;

· The Government should consider recycling the proceeds of future fuel tax increases to subsidise public transport spending and alternatives to conventional fuel.

The Chairman of the Committee, Peter Ainsworth MP, commented:

"It is increasingly obvious that we are going to fall far short of the UK carbon reduction target, and a key problem area is transport.  If the Government's commitment to sustainable development is to be taken seriously, it must take more radical action.  It is also disappointing that the Treasury has done so little to promote domestic energy efficiency - despite two consultations on this topic in the last two years. There is an urgent need to look afresh at the scale of the challenges we face and develop an adequate response."

Some conclusions from the Committee's report are printed below.

For further information on the Committee's inquiry, journalists may phone Committee staff on 020-7219-1378, or may contact Peter Ainsworth himself on 07887 997838.

Other inquiry conclusions and recommendations (not reproduced in full)

· As a percentage of total tax, the revenues from environmental taxes have recently been at their lowest level since 1993.  

· The continued growth of carbon emissions from transport remains one of the most serious problems we face, and the Government's commitment to sustainable development will be called into question unless it takes steps to confront this issue.  We urge the Government to implement the planned rise in fuel duty at the earliest opportunity.

· We are disappointed that the Future of Transport White Paper had nothing new to say on the practical steps the Department for Transport would take to tackle carbon emissions from transport and to promote a shift to a low carbon economy.   It will take 10 to 15 years to introduce road charging on a national basis and such a regime would be far more of a blunt instrument than the present system, where larger differentials in rates of fuel duties and VED can potentially be used to promote a shift to low-carbon vehicles. 

· It is unfortunate that the Energy Efficiency Action Plan has had to be produced before a number of key evaluations on which it should have been based - including Spending Review 2004, the revised DTI Energy Projections, and the review of the Climate Change Programme.  As a result, it is impossible to assess to what extent the measures it contains are sufficient to deliver the absolute emission levels required, or even unclear whether the various components of the Plan will indeed deliver their forecast benefits.

· We recommend that the Treasury should fulfil its earlier commitment to this Committee and regularly carry out systematic ex post appraisals of environmental tax measures.

· We are sceptical of the figures quoted for emissions savings from Climate Change Agreements and recommend that baseline figures and future assessments, including that for 2004, are independently audited.

Notes for Editors

The Committee's previous reports and press notices can be found on its website.