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Dr. Turner: Yes, I think so. It is a means test under which only those who are already fairly wealthy receive any benefit. But, as my hon. Friend knows, that is a familiar pattern in Conservative promises.
We heard some severe criticism of the Budget from my hon. Friend the Member for Nottingham, South (Alan Simpson) on Budget day, which I felt was a little curmudgeonly. It is not surprising that this Budget does not contain much in the way of major new
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environmental fiscal measures. Indeed, it would have been foolish to include such measures at a time when the Government are undertaking a complete review of climate change policy. Fiscal policy is obviously a central plank of the delivery of that policy, so it would be silly to make major changes in this Budget. The next Budgetthe next Labour Budget
Let me make a few suggestions to the Treasury. Let me suggest a few fiscal measures designed to combat climate change. I am happy for us to maintain the climate change levy and the renewables obligation to promote energy conservation and the deployment of renewable energy, but I think we must enhance those measures considerably. We must beef up the renewables obligation, or lay on top of it something that is much more powerful in encouraging new, renewable, non-carbon-emitting electrical generation technologies into market deployment.
The Royal Society recently suggested a carbon tax, and the Science and Technology Committee has suggested a comprehensive system involving a carbon tax and a carbon tax credit. Electrical generators emitting carbon dioxide would pay a carbon taxat present they constitute about 96 per cent. of our generating capacitywhile generators that do not emit carbon dioxide and operate on the basis of renewable resources would receive a carbon tax credit.
A carbon tax would generate the resources needed to supplement and speed up investment in renewable energy. This is not a stealth tax but a "behaviour tax", which is intended to punish environmentally bad behaviour and to reward the good. We could profitably extend that principle throughout the whole range of environmental taxation; indeed, it is already embodied in some existing taxation measures.
We must also address transport. We cannot go on not increasing what is, in effect, a carbon tax on fuelthe fuel escalatoryear on year. To be fair, it was introduced by the Conservatives and I totally support it. We all know that it reached the limit of public acceptability a few years ago, since when the Treasury has been a little leery of increasing it. We are going to have to bite the bullet sooner or later and start progressively increasing it, but again, we can use corresponding carrots. For example, we can go further with lower taxation for environmentally friendly fuels, and we can probably do more to stimulate the production and sale of biofuels.
We could also do more by using the proceeds of carbon taxation to accelerate the development and deployment of hydrogen fuel transport initiativeson which, of course, we would charge no tax at all, thus making such initiatives very much more attractive. We have to overcome the enormous hurdles of getting the public to accept the use of hydrogen and of setting up distribution, but once they are overcome, such initiatives have the potential to reduce our carbon
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emissions by about 50 per cent. That is a very worthy long-term aim, and fiscal measures will be a key driver in achieving it.
Mr. Hopkins: I am very interested in what my hon. Friend is saying, which I broadly support. Recent research suggests that a particularly efficient way to develop renewables is to build energy-efficient buildings, which are more economical pound for pound than wind generators, for example. Does he think that the Government need to take more seriously building installation and technology that saves energy?
Dr. Turner: I thank my hon. Friend for that intervention, with which I broadly agree. There is a great deal more that we can do in terms of energy conservation, and in fact this Budget contains further measures to that end. I want us to go further and to introduce much more stringent building regulations. The technology for zero-emission buildings exists now. We should strongly encourage its use, and we need more fiscal measures to do so.
Returning to transport, we have made a start by implementing differential road taxation for vehicles according to their CO 2 emissions. I thoroughly endorse this approach but I would be inclined to go very much further, starting with a zero rate for vehicles that emit no CO 2 at all, escalating to quite punitive rates for "Chelsea tractors" that emit grossly excessive amounts for no useful purpose whatsoever. In fact, such vehicles are usually used to drive children to school in Chelsea.
Aviation, however, is an outstanding problem for which no identifiable technical fix exists at the moment. There is a technical fix in sight for all the CO 2 that we currently produce, except that produced by aviation.
Mr. John Wilkinson (Ruislip-Northwood) (Con): The hon. Gentleman is talking nonsense, as he has been for a considerable period of time. Substantial improvements have been made in the fuel efficiency of power plants, particularly in respect of fuel consumption. Such technological improvement will continue, as it will in the aerodynamic sphere to reduce aerodynamic drag and as it will in the structural sphere to ensure that composite and other materials offer lighter but stronger structures. Could the hon. Gentleman please get something right?
Dr. Turner: I am perfectly well aware of everything that the hon. Gentleman mentions, but it does not alter the fact that we use air transport far more than we ever did or that CO 2 emissions from air transport have approximately doubled over the last 10 years and are likely to double again. It represents a very large source of CO 2 and I was making the point that it is the only major area of energy use where we cannot see a technical means of avoiding CO 2 emissions.
After the Hindenberg disaster, I imagine that it would be pretty difficult to persuade passengers to travel on a plane fuelled by hydrogen and even if they were so persuaded, there would not be much room for them. Unfortunately, even in liquid form, hydrogen is so light that it would virtually fill the fuselage, leaving little room for passengers. That is another awful technical difficulty to be overcome before we can achieve non-carbon-emitting aviation. I would like the Government to fund research into that subject in order to find a way forward.
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The measures I have outlined are more radical than those contained in the Budget. They are for the next Budget, but I welcome some of the measures in this Budget. For example, the reduction of VAT to the minimum on micro-CHP plants has delighted the British combined heat and power industry. Micro-CHP has the capacity, if it is widely used, to save millions of tonnes of CO 2 . The same applies to heat pumps. Instead of losing the heat in extraction, it is recovered and kept within the buildinga very useful energy conservation measure.
Mr. Francois: I am grateful to the hon. Gentleman for his courtesy in giving way. May I say that my hon. Friend the Member for New Forest, West (Mr. Swayne) has been slightly unfair to him? His speech has not been entirely fuelled by gas; a large part of it has been empowered by wind.
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