Consumers could be hit by steep price rises for a range of goods from food to hotel breaks under plans to tackle climate change being considered by David Miliband. The Environment Secretary is consulting taking sweeping powers to extend curbs on greenhouse gas emissions so that they cover many more businesses, including supermarkets and hotel chains — curbs that at present apply only to the big industrial users. The costs incurred are potentially huge and are likely to be passed on to the consumer.
The proposal to take “enabling powers” to extend the carbon-trading scheme to other sectors will be taken in the new Climate Change Bill, Mr Miliband confirmed yesterday.
But amid signs of a government split on how to respond to Sir Nicholas SternÂ’s report on the impact of global warming, Gordon Brown is to reject Cabinet calls for swingeing tax rises on motorists and domestic consumers, The Times has learnt.
Airline passengers and drivers of large “gas-guzzling” vehicles will bear the brunt of green tax levies, to be introduced by the Chancellor in his last Budget in March. But Mr Brown is opposed strongly to measures that would allow petrol prices to rise even when the world price of oil slumped, as proposed in a leaked letter to him from Mr Miliband.
The disclosure over the weekend of Mr Miliband’s “wish list” of taxation measures angered the Treasury and sources were blaming “rogue elements” in No 10 yesterday for its appearance over the weekend. Mr Brown was said to be upset because the leak focused attention on speculation about tax rises rather than on the central message of Sir Nicholas’s report; that if the world took concerted action on global warming growth need not be affected.
Allies of the Chancellor described the leak as an attempt to put pressure on Mr Brown and to test his modernising credentials.
When they appeared with Sir Nicholas at the launch of his report yesterday both Mr Brown and Tony Blair emphasised the importance of international action - rather than domestic taxes - to reduce carbon emissions. Mr Brown made it plain that he was pinning his hopes on a massive expansion of the carbon trading scheme, by which governments aim to reduce pollution through market mechanisms.
He suggested that the scheme, under which firms have to buy credits to emit more than a set level of greenhouse gases, should be extended by linking it with others in California, Australia, Japan and elsewhere.
The Climate Change Bill will enshrine in law the Government’s long-term aim of reducing carbon emissions by 60 per cent by 2050. Thousands of organisations, from supermarket groups to hotel chains, are not covered by EU schemes limiting carbon emissions. The “enabling powers” would allow ministers to extend these curbs at will across the rest of Britain’s businesses — with potentially huge cost consequences. Many companies that broke possible limits on their emissions and were forced to buy “carbon credits” would be likely to pass on costs to the consumer.
The Environment Department confirmed that the powers could be used to extend curbs to “non-energy intensive” sectors. It said in the summer that measures for businesses not covered by the EU trading scheme, and which account for a tenth of Britain’s greenhouse gases, could bring carbon savings of 1.2 million tonnes a year by 2020.
David Frost, the head of the British Chambers of Commerce, said that the measures would amount to “stealth tax” in which “business becomes the villain”.