To ask the Chancellor of the Exchequer what steps his Department is taking to ensure that the UK is preparing to link the European Commission"s forthcoming proposals to modify the rules on taxation of energy products and the agreement on community-wide emissions trading as part of its approach towards achieving carbon savings and energy conservation. [116337]
The minimum rates of duty in the Energy Products Directive will not affect the UK"s rates of climate change levy and hydrocarbon oils duties and the UK"s right to exempt domestic and charity non-business use of energy from the climate change levy will be preserved.
The Government will consider further the relationship between tax and tradable permit schemes as it prepares proposals for allocating emissions targets to installations covered by the EU trading scheme. The Government will aim to ensure that environmental costs can be internalised as efficiently as possible, irrespective of whether the instruments are international or domestic, seeking to ensure a smooth transition to the new arrangements with minimum compliance costs for business. The potential impacts of combined measures on business competitiveness and fuel poverty will also be taken into account. The Government envisages that the EU trading scheme will play an important role in delivering the emissions reduction ambition set out in the Energy White Paper. Having gained valuable experience from the operation of the UK scheme, UK industry and the City of London will be well placed to take advantage of a wider emissions trading market.