Real changes need real incentives

Written by Chris Huhne MP and published in BBCi on Thu 1st Jun 2006

The Liberal Democrats have always placed the environment at the heart of our thinking. Climate change presents the greatest challenge of our to policy makers, not only in the UK, but internationally. The Liberal Democrats 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 step change in behaviour is required if we are to cut our carbon emissions and ensure we reach the target of a 60 percent 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 our power generation. We have proposed a fundamental change of approach that would see Government tackle the problem head on, rather than relying on grand rhetoric and international publicity stunts.

The Liberal Democrats are the only party to have grasped that the only way to encourage sustainable behaviour is through financial incentives. CO2 emissions in the UK have been rising as Green Taxes have been falling as a proportion of GDP. Changing behaviour and cutting out carbon can be best achieved by providing people with a reason to behave sustainably. We have proposed a Green Tax Switch which would see taxes shifted from things we want to encourage, such as work, to un-sustainable polluting behaviour. The Liberal Democrats would combine cuts in personal taxation with increases in Vehicle Excise Duty 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 £2000 for the worst polluting vehicles. This rate would only apply to newly purchased cars. People in rural areas, who rely on their vehicles as there is little public transport, would be protected by a fifty per cent discount in all but the top band of VED. Research by the Energy Saving Trust 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.

Those who choose to purchase the most polluting vehicles must accept that there is a significant environmental cost, but this policy would not prevent people from purchasing any particular type of vehicle. For example, there are working farm vehicles, luxury saloons and sports cars available that produce less than 225grammes per kilometre of co2, and would therefore not pay the top rate. However, in order to accelerate our progress in this area, we need a package of measures to cut carbon emissions. Fuel duty must also been maintained in real terms, rising in line with inflation. 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.

Our energy consumption in all sectors is likely to dictate our future carbon emissions. 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. Unfortunately the Prime Minister seems to have decided that throwing billions of pounds at a new nuclear programme is a better alternative than investment in environmentally sound forms of electricity generation. The energy efficiency of our housing is stock is a disgrace and current government schemes in place to address this are not fit for purpose in tackling this problem. Even our new homes are being built to a standard that uses 65 per cent more energy than new homes in Sweden. And those homes rely on power generated by wasteful fossil fuel power plants which transmit electricity long distances, thus losing as much as two thirds of the energy in the process. We need a radical process of integrating energy efficiency measures with a decentralised network of energy production. Britain has the best natural resources for the production of clean, renewable energy in Europe but we are not reaping the benefit of our natural advantage.

Britain should be taking an international lead on climate change but sadly, despite the Tony Blair and Gordon Brown's warm words, we are lagging behind. The Liberal Democrat green switch would allow us to take a lead again, but we also need to renew our international commitment. We need firm agreement on how much carbon we can acceptably emit and how much climate change we can tolerate: the only morally defensible position is that we ultimately arrive at a position where each global citizen - whether British or Chinese - is able to emit an equal and sustainable amount of carbon. It would be criminally irresponsible for governments to make short term decisions which have potentially catastrophic consequences for future generations.

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.

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