Protecting the environment
Tackling climate change is one of the most serious challenges that the world faces. The Government is committed to delivering strong, environmentally sustainable growth and leading the international response to this challenge.
This year's Budget sets out the actions the Government is taking to ensure that the UK is well-placed to succeed in the low-carbon economy of the future including:
- laying the ground work for the introduction of five year carbon budgets, and announces that the first carbon budgets will be set alongside Budget 2009;
- pre-announcing that fuel duty rates will rise by 0.5 pence per litre above indexation on 1 April 2010, in order to reduce polluting emissions and fund public services. However, the Government will postpone the 2 pence per litre fuel duty increase expected on 1 April 2008 until 1 October 2008;
- significant reform to car vehicle excise duty (VED) rates to encourage the development and purchase of lower carbon emitting cars, with the introduction of new bands from 2009 to reward drivers of the cleanest cars and higher first year rates in 2010-11 to influence purchasing choices. As a result of these changes the majority of drivers will be better, or no worse off;
- supporting the most sustainable biofuels by removing the duty incentive and increasing support through the Renewable Transport Fuels Obligation;
- increasing the climate change levy in line with inflation, in order to maintain the environmental incentive effect;
- announcing that the Government will introduce legislation and impose a charge on single-use carrier bags if retailers do not take voluntary action;
- building on the announcement in the Pre-Budget Report 2007, that air passenger duty will be replaced by a duty payable per plane, environmental signals will be further enhanced by increasing the per plane duty by 10 per cent in its second year of operation;
- auctioning 100 per cent of allowances to large electricity producers in Phase III of the EU Emissions Trading Scheme.