Firms face compulsory carbon quotas

Many of the UK's big businesses - including supermarkets, banks, universities, hotel chains, hospitals and government departments - would be forced to sign up to a carbon-trading scheme under proposals being drafted by ministers.
The scheme has received an initial enthusiastic response from some of the companies, government sources said last night, and may prove to be a central feature of a climate change bill in the spring.
The proposed system would require firms either to reduce their emissions or buy permits from other companies, giving them the right to pollute above their agreed ceiling. The plan, to be outlined today, would bind 5,000 companies and organisations not included in an EU-wide trading scheme.


The intention is that the UK initiative would cover all organisations with annual electricity bills of more than £250,000, or with electricity consumption above 3,000 megawatts. Collectively, the firms account for annual emissions of about 15m tonnes of carbon, more than a quarter of all UK business and public sector emissions. The environment secretary, David Miliband, is consulting until January on whether it should be mandatory or voluntary; Whitehall is leaning towards a mandatory scheme.
The idea is one of a number of proposals being put forward by Labour to rebut criticisms from the green lobby that the government has not done enough to combat climate change. Gordon Brown will use today's pre-budget report to bolster his credentials in the field by announcing steeper charges for air travel, dearer petrol and higher road tax for big cars.
Laying out the government's initial response to the recent Stern review, the chancellor plans to double air passenger duty on flights. That would add £5 to an economy short-haul flight and £10 to a long-haul flight. Business class travellers would see the duty on long-haul flights rise from £40 to £80.
He is also likely to end the three-year freeze on fuel duty in the face of falling oil prices and will add at least 1p a litre to petrol and diesel prices. Raising duty in line with inflation would add 1.2p a litre but Mr Brown is likely to resist calls from green groups like Friends of the Earth to reintroduce the "escalator" which was used by Conservatives and Labour in the 1990s to raise fuel duty by several percentage points above inflation. It was not clear if Mr Brown would immediately increase road tax for gas-guzzling cars or say he will bring in new rates in March.
Green campaigners are unlikely to be impressed. FoE points out that in 1997, green taxes were 9.5% of all taxes but by 2005 it had fallen to 7.7% while, in spite of repeated government promises of substantial cuts, UK carbon dioxide emissions have risen under Labour.
The group is demanding council tax cuts for households that improve their energy efficiency. It also wants incentives for the installation for microgeneration, such as wind or solar power, and road tax of £2,000 on the most polluting cars. "Green taxation has fallen under Gordon Brown. The chancellor must show that he is serious about tackling this issue," said spokesman Dave Timms.
Though not part of the pre-budget report, the government hopes its UK carbon trading scheme would place energy emissions at the heart of the burgeoning corporate social responsibility agenda. It has estimated that within six years the cost of investing in energy-saving measures would be covered by savings on energy bills.