TUC calls for ‘green’ power tax

Mar 4 2008 by Sue Scott, Evening Gazette

THE Government has been urged to introduce a “green” windfall tax on energy firms and spend the money on tackling fuel poverty and creating environmental jobs.

The TUC said official estimates showed that the electricity industry will make windfall profits of £9bn over the next few years, thanks to a European emissions trading scheme.

General secretary Brendan Barber said: “These excess profits do not flow from investment, innovation or hard work but simply result from the way that carbon trading has been implemented across Europe.

“While carbon trading has a crucial part to play in tackling climate change, these windfall profits will give it a bad name unless they are used to fund socially useful and green spending.

“This should be the centrepiece of a green Budget.”

The TUC’s Budget submission makes a series of “green” recommendations, including a boost for carbon capture and storage projects.

Meanwhile, the campaign is mounting for VAT on consumer goods to be replaced with a graduated environmental tax, which encourages people and companies to be greener.

Green taxes are needed to change the nature of products to reduce their environmental impact in their manufacture and use, environmental think-tank Green Alliance said in a report.

Under the scheme, the most environmentally friendly products could be exempt from the levy, the Good Product, Bad Product study said.

The report suggests the scheme could start with particular sectors such as packaging or products, such as batteries, having to provide clear price signals to encourage more environmentally friendly design of goods, or innovation in energy and water efficiency and recyclable materials.

For example, a levy on types of packaging could be designed to discourage companies from developing hard-to-recycle materials, the report said.

It could also target products that use energy unnecessarily such as electric pepper grinders.