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PBR LATEST: Budget 2008 set to reveal go-green car taxes

Date: 09 October 2007


Chancellor Alistair Darling reinforced the Government's commitment to pushing the UK toward a greener future with a promise to "implement the next part of the Stern Review".

Darling promised to reveal the CO2-based company car tax levels for 2010-11 in the 2008 Budget. He added: "These changes are forecast to deliver significant savings of between 1.5-3.3 million tonnes of CO2 per year by 2020."

Alongside this he confirmed the cautious way biofuels will be promoted will be through the Renewable Transport Fuel Obligation, rather that by offering LPG-style fuel tax discounts.

"The Renewable Transport Fuel Obligation (RTFO) will become the principal mechanism for encouraging the development of biofuels, leading to a significant reduction in emissions of greenhouse gases from the transport sector, by increasing the use of biofuels.

"The total net carbon savings associated were initially estimated to be in the region of 3.6m tonnes of CO2 per year by 2010. Estimating the precise carbon savings from biofuels is an emerging area of work and in order to reflect more accurately the marginal impact that biofuels may have on the fuel efficiency of vehicles, the Government has revised its estimates downward to 2.6-3m tonnes of CO2 per year by 2010."

However, the Government explained that it would look at the way biofuels were produced and only promote the greenest production methods.

Darling also said: "In addition, building on the package of measures announced in Budget 2007, the Government will extend the current duty incentive for biofuels to biobutanol on a pilot basis, with the aim of assessing its environmental benefits and performance as a transport fuel."