Next UK government should reform complex energy taxes and depoliticise energy infrastructure investment

The next UK Government after the General Election on 7 May should reform the UK’s overly-complex energy taxation and create new institutions to depoliticise infrastructure investment, particularly in the energy sector, according to a report published today (Monday 30 March) by the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science and the Grantham Institute at Imperial College London.

The recommendations are among several new measures outlined in the report to provide greater clarity and a sense of direction to enhance the credibility of UK climate change policy, while reducing greenhouse gas emissions at the lowest possible cost to the economy.

The report calls on the next UK government to:

  1. build long-term investor confidence in the UKs low-carbon economy;
  2. harness the UK’s potential as a leader in energy ‘cleantech’;
  3. ensure that the transition to an energy-efficient and low-carbon economy is affordable for businesses and households;
  4. increase the UK’s resilience to extreme weather; and
  5. demonstrate leadership in international climate negotiations.

It points out that merging and simplifying several carbon taxes – including the Climate Change Levy, Climate Change Agreements and CRC Energy Efficiency Scheme – into a single tax would result in a more consistent price of carbon and lower administrative costs for business and government.

The report states: The UK has a complex system of energy taxes which affect the business sector. Overlaps between taxes mean that carbon prices are uneven across sectors and fuels, and result in some businesses paying for their greenhouse gas emissions several times over.”

The report also proposes a number of new independent institutions so that investment in infrastructure cannot be politically swayed by ministerial agendas. This would involve creating a strategic board, a planning commission and dedicated financial institution.

The report states: “Better strategy, delivery and funding of major projects will be essential to deliver the required investment in UK infrastructure, particularly in energy.”

The report also calls for the next government to reform the Flood Re insurance scheme. It points out that Flood Re can be improved by providing households with flood risk information and rewarding flood risk management by homeowners.

The report states: “The availability and affordability of flood insurance should be improved by re-designing Flood Re and placing risk reduction at its core.”

Climate change priorities for the next UK government

NOTES FOR EDITORS

  1. The Grantham Research Institute on Climate Change and the Environment (http://www.lse.ac.uk/grantham) was launched at the London School of Economics and Political Science in October 2008. It is funded by The Grantham Foundation for the Protection of the Environment (http://www.granthamfoundation.org/).
  2. The Grantham Institute – Climate Change and Environment (http://www.imperial.ac.uk/grantham), at Imperial College London is committed to driving research on climate change and the environment, and translating it into real world impact. It was established in February 2007 with funding from The Grantham Foundation for the Protection of the Environment