Climate change won a mention in the first two minutes of Alistair Darling’s Budget Wednesday, billed in advance as a “green” Budget that would raise green taxes and curb greenhouse gases.

But the measures outlined in his speech fell short of radical change and are unlikely to have much impact on emissions.

According to KPMG, the measures announced on Wednesday would account for a reduction of emissions of about 5 per cent by 2015, which would not put the UK on track to meet its obligations to cut emissions by 20 per cent under the European Commission’s proposals.

The green measures will raise about £1.6bn in extra revenue this year, rising to £1.77bn by 2010-2011, chiefly from increases in fuel duties if they come into force and changes to vehicle excise duty. But the proportion of tax revenue coming from green taxes will fall by 0.1 percentage point to 6.91 per cent in 2008-09.

Frank Sangster, head of KPMG’s environmental tax and incentives group, said: “It is still very unclear from a [consumer] and corporate perspective how the vast majority of carbon reduction will be delivered.”

The main green measures will hit cars, the most polluting of which will be more heavily taxed, and electricity companies, which may face having to buy all of their permits to produce carbon after 2012.

Retailers must curb their use of disposable carrier bags or face legislation next year forcing them to charge a levy on the bags.

The new aircraft duty, charged per jet instead of per passenger, will raise 10 per cent more revenue in its second year of operation, the chancellor promised. The construction industry will have to work out how to make all new office buildings “zero carbon” by 2019.

Next year, the chancellor will also have to present a “carbon budget” alongside the Budget, showing how the government will set the UK on a carbon-cutting trajectory to 2022. The carbon budget will set out how much carbon the country can emit within a four to five-year period.

Many businesses were as critical as green campaigning groups of the chancellor’s performance, saying the measures failed to give much certainty on the future of environmental regulation. Gareth Stace, head of environment at the EEF manufacturers’ organisation, said: “This certainly was not a green Budget, at a time when both the domestic sector and industry needed a green Budget.”

He dismissed the plastic bag proposals as “emotive but not really a big issue”, and said the chancellor had given few green incentives to businesses or consumers.

Stephen Robertson,
director-general of the British Retail Consortium, said: “It’s clear the chancellor has huge holes in his accounts and is trying to hide an old-fashioned tax grab behind a bags and alcohol smokescreen.”

Green campaigners slammed the Budget. Tony Juniper, director of Friends of the Earth, said: “The chancellor promised to put sustainability at the heart of today’s announcement, but he has merely tinkered in the margins. He should have [made] it cheaper and easier for people to go green.”

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