AUTHORS :Paul Ekins (PSI)-Claire Monkhouse-Ian Skinner-Rebecca Willis (Green Alliance)

The UK has committed to reducing its emissions of greenhouse gases by 12.5% by 2010, and has a domestic commitment to a 20% reduction of carbon dioxide by the same date. However, deeper cuts will be needed in future – Royal Commission on Environmental Pollution (RCEP), for example, has recommended that the UK government should reduce national carbon emissions by 60% by 2050.

The government published its climate change programme in 2000, and is currently drawing up a White Paper on energy, which will provide a long-term framework for energy policy. Like many others in the EU, the UK government has favoured the use of economic instruments to tackle climate change and reduce carbon emissions.

In the March 2002 budget, the Treasury announced its intention to review its use of economic instruments to achieve environmental outcomes. This report is intended to contribute to this debate, and to begin the debate about how the Climate Change Levy should move forward. It will also contribute to the energy White Paper, to be published later this year.