UK To Oppose Ringfencing Of EU Carbon Trading Revenue

by Robert Lee, Tax-News.com, London

13 August 2008

The UK government is reportedly opposed to the ringfencing of revenues raised from the auctioning off of carbon credits to airlines under the European Union's proposed Emissions trading Scheme (ETS).

According to environmental media service BusinessGreen.com, a spokesman from the Department of Environment, Food and Agriculture (Defra) has said that while the UK government remained committed to bringing the airline industry into the ETS, Westminster does not believe that the ringfencing, or "hypothecation" of revenue from carbon credit auctions for projects designed to tackle climate change is an effective means to use such money.

"As the government has maintained throughout it does not hypothecate revenue. That does not mean we do not spend on green initiatives, but we do not assign different pots of revenue to do that. It is important that government has flexibility to make spending decisions and decide upon its priorities," the spokesman was quoted as saying.

During a sitting last month the European Parliament approved a proposal to include the aviation industry in the EU-ETS. Under the new directive greenhouse gas emissions from flights to, from and within the EU will be included in the EU ETS from 2012. All airlines will be covered whatever their nationality.

The scheme also calls for airlines to purchase 15% of their emissions permits at auction so that money can be raised and used by member states to spend on tackling climate change, reducing greenhouse emissions, and adapting to the impact of climate change, both in the EU and "third countries."

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