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Environmental measures

Despite the current economic climate environmental goals remain a high priority for the Government, as evidenced by the recent announcement that it has increased the UK's emissions reduction target to 80% of 1990 levels by 2050.

With a view to introducing a green stimulus and supporting low-carbon growth, the following have been announced:

  • Accelerating £535 million of capital spending on energy efficiency, rail transport and adaptation measures;
  • Inclusion of aviation in the EU Emissions Trading Scheme from 2012;
  • The Renewables Obligation will be retained to provide financial support and greater certainty for large-scale renewable electricity and will be extended by at least 10 years;
  • The previously postponed 2p per litre fuel increase will come into effect from 1 December 2008;
  • Installing 600,000 insulation measures this winter, through the £6.8bn Home Energy Saving Programme;
  • Reform to vehicle excise duty with effect from April 2009, although the maximum increase will be £5 in 2009 and no more than £30 in 2010;
  • Reform of air passenger duty from 1 November 2009 to introduce four bands based on distance travelled. Proposals to introduce an aviation duty which would have been levied per plane have been scrapped;
  • From April 2009 the tax relief for business expenditure on cars will be based on emissions;
  • From 1 April 2009 land remediation relief will be extended to specified expenditure and also amended to provide greater clarity. This relief is intended to incentivise bringing long term derelict land back into use. The relief will give bodies liable to corporation tax a deduction of 150% for qualifying expenditure on removing or mitigating the effect of contamination.


Our view
The Government has had to balance its environmental objectives with the current economic climate, but it is clear that the environment remains a clear area of priority. This is most clearly exemplified with the shelving of the proposed aviation duty after listening to the concerns of the industry in the consultation process. However, the Government has not abandoned its environmental objectives in this area as aviation will be included in the EU Emissions Trading Scheme from 2012 and air passenger duty will be amended from 2009 to more closely align the tax with distance travelled.