Carbon Tax Flight Plan Grounded, but Take Off for Energy Investment Scheme

Revenues raised from carbon taxes, such as the EU Emissions Trading Scheme, will be best used by investing on energy. According to a report from Consumer Focus, investments into energy schemes such as home insulation upgrades, is one of the best ways to create jobs, boost the economy, and reduce carbon emissions. However, the EU will be suspending its aviation carbon tax for flights originating outside the region for a year, while negotiations for a multilateral agreement are underway. A new deal from the International Civil Aviation Organisation could see a global implementation of flight tax as part of the initiative to cut aviation carbon emissions. Read more

Carbon taxes could boost economy and lower energy bills

By GreenWise staff (9 November 2012):

Investing money raised through carbon taxes on energy is one of the best ways to create jobs and boost the economy, according to a new report from Consumer Focus.

The study, ‘Jobs, Growth and Warmer Homes’, suggests that revenue raised from carbon taxes, such as the EU Emissions Trading Scheme, could be used to improve the energy efficiency of homes; delivering warmer homes and cheaper energy bills. It would also create 71,000 jobs by 2015 and 130,000 by 2027.

From 2013, the Treasury will receive billions of pounds in revenues from energy companies in the form of a carbon tax. But currently there are no plans to recycle the money to reduce carbon emissions.

Consumer Focus says the Government’s flagship energy efficiency policy, the Green Deal, and the Energy Company Obligation (ECO), which will see consumer energy companies providing £1.3 billion a year in energy efficiency upgrades for low income and hard to insulate homes, could become much stronger through the use of recycling carbon revenues.

Overall this strategy would quadruple the impact of both the Green Deal and ECO and would cut household emissions by around 5.6 per cent by 2027, according to the analysis, by Cambridge Econometrics and Verco.

The report suggests this use of the money would be a more effective way of boosting the economy than using the money to invest in infrastructure, general Government spending or cutting fuel duty or VAT.

Fuel poverty

It also argues that it would be a much better way to tackle fuel poverty than current Government plans. Government estimates show the ECO will lift no more than 250,000 households out of fuel poverty – five per cent of households by 2023. But according to the analysis, if carbon revenues were used to support the programme as much as 87 per cent of UK households could be removed from fuel poverty by 2016.

Fuel poverty currently affects over six million UK households, and this is predicted to grow to 9.1 million households – more than one in three homes – as energy prices increase. Energy consumers will pay an additional £4 billion each year in carbon taxes through their energy bills by 2020.

“We need to make heating our homes more affordable, cut carbon emissions and achieve economic growth. Using carbon taxes to ensure our homes leak less energy represents a triple-whammy,” Mike O’Connor, chief executive at Consumer Focus, said. “This would simultaneously improve the quality of life of millions of people, slash carbon emissions and generate greater economic growth than other measures. Consumers will be paying these taxes through their bills. They can and should feel the benefit.”

“Marshall plan” to reduce energy bills

The new report, commissioned by Consumer Focus and a coalition of organisations called The Energy Bill Revolution, details a range of funding options from using 35 per cent of carbon tax revenue to 95 per cent and how this could cut fuel poverty by 75 per cent to 87 per cent depending on the level of investment.

“This is the Marshall Plan the UK needs to slash the energy bills of the most vulnerable and re-build the economy,” Ed Matthew, director of the Energy Bill Revolution campaign, said.  “Consumer Focus is urging the Government to carefully review this new research and the existing evidence from the Energy Bill Revolution, and consider this policy approach on energy efficiency. It would both help our economic recovery and give vulnerable households ongoing benefits from warmer homes, lower energy bills and better health.”


WWF-UK welcomed today’s report and urged the Government to start taking action.

“WWF has long called for the use of our environmental taxes to support energy efficiency and the UK’s transition to a low carbon economy. This report by Consumer Focus provides us with even more evidence that such a policy should be implemented and implemented quickly,” Zoe Leader, Energy Efficiency Policy Officer at WWF-UK said.

Commenting on today’s report, Energy and Climate Change Minister Greg Barker, said:

“The Government is taking action to help households struggling with rising energy bills this winter, as well as driving forward massive changes to reform our electricity market and improve the energy efficiency of millions of homes and business across the nation.

“Two million households will get help under the Warm Home Discount Scheme this year, including more than one million low income pensioners who will get £130 off their bill. There is also help available with heating and insulation under the Warm Front scheme. And from next year the Green Deal will help millions improve their homes so they are better insulated, with extra help for those who need it most.”



AFP (14 November 2012):

BRUSSELS – The European Union (EU) will freeze for a year its rule that all airlines must pay for their carbon emissions for flights into and out of EU airports, the EU executive said, following threats of international retaliation.

Flights within the EU will still have to pay for their carbon emissions.

The year-long exemption will apply to flights linking EU airports to countries outside the bloc, a move welcomed by US and Asian officials.

Climate commissioner Connie Hedegaard said on Monday that she had agreed “to stop the clock” to create a positive atmosphere for international talks on an alternative global plan to tackle airline emissions.

“But let me be very clear: If this exercise does not deliver – and I hope it does – then, needless to say, we are back to where we are today with the EU ETS (Emissions Trading Scheme). Automatically.”

The United States, China and India have put intense pressure on the EU. Debate in the US Congress is set to resume this week on legislation to counter the EU rules.

“While I am pleased the EU has temporarily suspended its efforts to unilaterally impose a tax on our airlines flying over US and international airspace, the EU’s announcement does not rule out future efforts to tax foreign carriers,” said Senator John Thune, who led efforts in the US Senate to block the law.

China also opposed what it said was the EU’s unilateral move and prefers to work under mechanisms such as the United Nations Framework Convention on Climate Change.

“We should oppose unilateral measures,” Chinese Foreign Ministry spokesman Hong Lei told reporters in Beijing.

Environment campaigners said the EU was giving up too much, too soon. But they said opponents could no longer blame the EU for any lack of progress at the United Nations’

International Civil Aviation Organisation (ICAO), which is seeking an alternative global deal.

The EU agreed on its law after more than a decade of talks at the ICAO failed to find a way to curb aviation emissions. The proposed year-long waiver – meaning no carbon payments before April 2014 for international flights – gives the ICAO until its general assembly late next year to reach a global deal.

The cost of the EU’s aviation law is minimal, at €1 (S$1.60) to €2 per passenger per flight, given the weakness of the EU Emissions Trading Scheme, on which the carbon price has sunk under a glut of surplus permits following the region’s economic slowdown.


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