'Green Budget' hits business and gas–guzzlers ... but hard enough?

Gordon Brown eagerly drew the battle lines for a general election between him and David Cameron yesterday as he unveiled a Budget that was heavy on politics but light on economics. Presenting his tenth, and possibly last, Budget, the undisputed prime minister-in-waiting contrasted his plans to invest more in public services, notably education, with Mr Cameron's goal of cutting taxes.

Mr Brown deliberately expanded pet projects opposed by the Tories to highlight his dividing lines with them - the climate change levy on business, the child tax credit, child trust funds for new-born babies and the "new deal" for the jobless.

Facing Mr Brown across the dispatch box for the first time, Mr Cameron described his rival as a "fossil-fuel chancellor" in a carbon-conscious world and "an analog politician in a digital age." more: http://news.independent.co.uk/uk/politics/article353017.ece

Greener fuels, energy-efficient cars and buildings, and small-scale renewable energy generation were at the centre of the chancellor’s focus on environmental issues in the budget. Businesses will pay more to reduce the UK’s greenhouse gas output, because the Climate Change Levy – unchanged since its introduction in 2001 – will go up from next year, when it will be linked to inflation.

Biofuels – vehicle fuels derived from plants – will benefit from a differential of 35p compared with conventional petrol from 2008.

A £50m microgeneration fund is intended to stimulate investment in small-scale renewable energy generation, such as mini wind turbines and solar panels for buildings.

Mr Brown also stressed his green credentials by promising an international framework to strengthen the European Union’s mandatory emissions trading scheme beyond 2012, and proposing a £20bn fund to be overseen by the World Bank to help developing countries to reduce greenhouse gas emissions. The lowest emitting cars will pay a new zero rate of Vehicle Excise Duty, while the rate to be paid on “gas-guzzlers” will rise to £210 per year.

Mr Brown announced a public-private partnership to set up an energy and environment research institute, which he said would be funded to the tune of £1bn.

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Mr Brown said he planned to "radically reform" vehicle excise duty, with a zero rate for cars with the very lowest carbon emissions and a £40 rate, instead of £75, for those with low emissions. Duty rates will then be levied in stages from £100 up to a new band of £210 for the most polluting vehicles.

"As a result of our decisions and at an eventual cost of £10 million a year to the Exchequer, the duty paid on 50% of cars will be frozen or reduced from tomorrow."

To further reduce carbon emissions, 5% of fuel will be made from bio-fuels from 2010 with new support and incentives worth up to 35p a litre by 2008. Meanwhile, the climate change levy will be linked with inflation from 2007. Britain will propose a World Bank facility of 20 billion dollars to fund alternative energy sources for developing countries.