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The Chancellor and Prime Minister were last night being accused of theft and being magpies by much of the press and opposition after what seemed to be a picking of other people's ideas and cobbling it together and presenting it as if the government had thought of it all itself.

The Lib Dems were at the fore saying that the government had stolen its plans for reforming the Air Passenger Duty.  Under the current scheme, a green tax is added to every ticket to cover the "social cost" of carbon emissions from the flight.  Many have considered that this tax has been targeted incorrectly.  The APD does not take into consideration the fuel efficiency of the aircraft, the number of passengers on the flight, or the distance of the flight.

Besides the Lib Dems, easyJet has been lobbying for change to move the tax onto the aircraft.  This is what Alistair Darling announced would happen from 1 November 2009, after a period of consultation in the new year.

Reacting to the changes Andy Harrison, easyJet CEO, said:
"It is right to tax emissions, not passengers. That means reflecting a combination of aircraft type and distance flown. But the reform should not be used as an excuse to further increase the burden of tax on passengers.

"We think it is a good step in the right direction that could be up and running before the November 2009 date indicated by the Chancellor today."

Mike Rutter, the Chief Commercial Officer of Flybe, also responded saying:
"As the Chancellor constructs his new tax it is crucial he does not penalise isolated areas, dependent on transport, with a one-size-fits-all tax.  He must instead adopt a more tailored approach with the carbon foot print of each aircraft at the front of his mind.

"Communities like the north of Scotland, the south west, Northern Ireland and the Channel Islands rely on smaller aircraft to ensure sufficient frequency of services.  Any tax that doesn't look at the carbon foot print of aircraft will simply open the door for carriers to create artificial 'we'll pay your tax' promotions, designed to unnecessarily fill larger aircraft.  This will simply serve to INCREASE the negative environmental impact to the climate."

The changes will also bring freight and private "business class only" aircraft into the frame - having no passengers freight aircraft were not covered by the Air Passenger Duty, and neither were private jets.  These anomalies will change with effect from 1 November 2008.

The Government have promised that the consultation will consider ways to make aviation duty better correlated to distance travelled and encourage more planes to fly at full capacity. In advance of the introduction of a per plane duty, APD rates will be frozen at their current level for 2008-09.

Hilary Benn, Environment Secretary, said:
"Today's announcements build on the policies already in place that provide incentives for businesses and individuals to cut emissions and put the UK on the path to a low carbon future.

"The changes to how aviation is taxed, moving to the taxation of planes rather than passengers, will encourage airlines to operate more efficiently.

"The business community will welcome the added certainty of knowing that Climate Change Agreements will be extended until 2017, and the announcement on the future operation of the EU Emissions Trading Scheme, including the increased use of auctioning, show a real commitment to making the scheme fairer and more efficient.

"For individuals, we are working to make energy-efficient goods cheaper and more easily available, and we're leading the charge in Europe to cut VAT for the most efficient products, which would make a difference to every household in the country."


Reducing VAT
The Chancellor also announced measures to encourage energy efficiency and new technologies, including a push in Europe to speed up action to improve energy efficiency in consumer goods and to reduce the rate of VAT for the most energy-efficient products, consulting on the UK's product standards and providing incentives for businesses to install microgeneration.

Microgeneration
For the businesses, installing microgeneration can actually be financially detrimental because it can increase business rates.  The Chancellor announced that, subject to state aid clearance, the Government will "therefore not include microgeneration investments in ad hoc re-assessments of business rates liability from 2008. Such investments will now only be taken into account at the five-year re-valuation of business rates, providing up to five years worth of benefit to rate payers."

Housing
In order to encourage empty homes to be brought back onto the market, the Government has announced that VAT at 5% will be extended to houses that have been empty for two years - currently, houses need to be empty for three or more years to benefit from the reduced VAT rate.  This will take effect from January 2008.

Biofuels
Invoking a cautious tone on the sustainability of biofuels, the PBR says that VAT incentives on biofuels, will now include biobutanol, "on a pilot basis, with the aim of assessing its environmental benefits and performance as a transport fuel."

Carbon Capture and Storage
In the 2007 Budget, Gordon Brown, then Chancellor, announced that a competition would be launched to design and build a full-scale demonstration of the full capture, transport and storage chain (Carbon Capture and Storage - CCS).  With a CCS plant, rather than pumping CO2 into the atmosphere, it is pumped into geological seams deep underground.

The Secretary of State for BERR, John Hutton, announced details of this competition yesterday and is launching a short period of discussion with industry prior to the formal start of the competition in November 2007.

John Hutton said at the announcement:
"Finding cost-effective ways of using fossil fuels more cleanly is vital in meeting the twin challenges of climate change and energy security.

"Coal is abundant in the world but it is dirty. I am today committing the UK Government to backing the construction within 7 years of one of the world's first commercial-scale coal-fired CCS projects.

"Our analysis shows that post-combustion capture is the most relevant technology to the vast proportion of coal-fired generation capacity globally. A commercial-scale demonstration of this technology, as part of a full CCS chain, opens up huge possibilities, not just for Britain but also for the world.

"It has the potential to remove and safely store up to 90% of damaging CO2 emissions. The capture technology can also be retro-fitted to existing coal-fired plants. This will be vital in tackling climate change on a global scale - China alone built an average of one new coal-fired power station every four days in 2006.

"By 2030, wider deployment could see up to a third of Britain's electricity generated in this way and UK exporters of CCS technology and expertise cornering business worth many billions in a global market."