UK government resists calls to ring-fence carbon cash
Published May 9th, 2008
London - The UK government refused on Thursday to bow to pressure from environmentalists and business leaders to use the money raised from the EU Emissions Trading Scheme (ETS) to fight climate change.
In a letter to the UK Prime Minister Gordon Brown, the heads of the Confederation of British Industry (CBI), conservation group WWF-UK and power company E.on UK demanded that receipts from the auctioning of allowances in the EU ETS be used “to benefit the fight against climate change and its impacts”.
The letter’s authors suggested that auctioning could be worth “perhaps £300-£400 million [$587-783 million] per year from 2008–12, and several times that in subsequent years”.
In the first phase of the EU ETS, which ran from 2005 to 2007, almost all allowances were granted free-of-charge to companies which faced emissions targets under the scheme. However, in the second phase, governments are permitted to auction up to 10% of allowances – the UK has opted to auction 7%.
“While we accept there may be some technical difficulties in ring-fencing the revenue, it should be perfectly possible to announce a similar investment in low-carbon technologies and adaptation equivalent to the revenue raised by auctioning,” said the letter.
But a spokeswoman for Defra, the UK’s environment department, said that the money would be used where it was most needed – and not necessarily to fight climate change.
“Government allocates its income according to overall spending priorities, which include schools and hospitals, as well as low-carbon technologies and tackling climate change,” she said.
She claimed the government was “already providing unprecedented investment and support for low-carbon technologies”.
She cited the “£400 million [available] through the Environmental Transformation Fund between now and 2011, and increased investment for scientific research and the Energy Technologies Institute, which will have up to £1.1 billion to spend over the next decade”.
But the CBI and WWF suggested that, without the use of the money from auctioning, the UK would not have the funds to “substantially increase spending on energy technology research, development, demonstration, commercialisation and deployment”.
The country could also be left without the sums necessary to “cope with climate change which is already occurring and prepare for those future impacts that are now inevitable,” concluded the letter.
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