From the TUC

Are green taxes red tape? How we manage our environment

01 Jul 2011, by in Environment

Our woodlands are expanding, our energy use fell steeply last year because of the recession, and the government now raises £41.4 billion from environmental taxes, according to the latest Environmental Accounts. These stats provide a reality check on government’s green agenda.  They measure changes to the use of our natural resources – and how much tax government raises as we do so.  Green taxes are mean to shift the tax burden from good to “bad” activities like carbon emissions. They raised £1.9 billion more than in 2009 and more than double the amount received in 1993. So good are we at managing our scarce resources?

Our oil and gas reserves are shrinking. It helps explain but not justify dubious drilling for shale gas reserves, or “fracking”. We have 1.1 billion tonnes of recoverable oil resources and 840 billion cubic metres of gas. But a new report from the Tyndall Centre shows  how the extraction of shale gas risks contaminating ground and surface waters. The commissioned report – to be debated at a public meeting in London on 19 July – calls for a moratorium on shale gas development until there is a much more thorough understanding of the extraction process. A ban is being mooted in the European Parliament.

Energy consumption decreased by 7% between 2008 and 2009, to 210.8 million tonnes of oil equivalent. Last year’s fall is considerably higher than previous years, suggesting the economic downturn has had an effect on energy consumption. Economic output also decreased by 4.9% between 2008 and 2009.

Greenhouse gas emissions followed suite – with 636 million tonnes of CO2 equivalent emitted in 2009. This was a decrease of 58.1 million tonnes (8%) compared to 2008. The reduction being driven by a further falls in manufacturing, both from reduced output and greater energy efficiency.

Green tax receipts were 2.8% of Gross Domestic Product in 2010, unchanged from 2009 and down from 3.4% in 2000. So are they trending in the wrong direction?

  • energy taxes increased by £1.3 billion to £32.2 billion
  • road vehicles taxes increased by £0.1 billion to £5.7 billion
  • other environmental taxes, including air passenger duty, landfill tax, and aggregates levy, increased by £0.5 billion to £3.5 billion.

Governments need to win support for any kind of tax. But incessant fiddling with the new carbon tax on energy used by large service sector employers, like major retailers, is defeating its object. The Carbon Reduction Commitment was meant to save 1.2 million tonnes of CO2 a year by 2020. The Coalition decided to turn the CRC revenue recycling idea into a starightforward £1bn tax. Industry objected.

After removing 10,000 organisations from the scheme, the Energy Minister Greg Barker is proposing yet another round of consultations. The Minister said, “We’ve got to help business reduce their emissions, not strangle them in red tape.”  Sure, Government should seek to simplify legislation. But cutting carbon emissions is green tape not red. Good taxes and regulations ensure responsible management of our natural environment and climate.

TUC