Huhne hints at green tax hike

Energy and climate change secretary Chris Huhne has given the clearest indication yet that the coalition will raise green taxes in an attempt to cut greenhouse gas emissions and make good on its pledge to become the "greenest government ever".

Both the Conservative and the Liberal Democrat election manifestos featured commitments to increase the proportion of green taxes raised by the Treasury by shifting more levies on to polluting activities.

However, with the Treasury focused on spending cuts, no green tax hikes have yet been announced and the only environmental tax commitment to make it into the coalition programme for government was the pledge to replace air passenger duty with a per-flight duty.

But in an interview with the Sunday Times yesterday, Huhne insisted that an increase in green taxation was on the horizon.

"The government is absolutely up for a shift from taxation on general matters to things that pollute the environment," he told the paper. "There are lots of different elements we will have to look at. In the end, though taxes may fall to business, it's consumers who will end up paying."

Huhne insisted that any increase in green taxes, such as fuel duty, landfill tax or potentially a carbon tax, would be accompanied by the introduction of incentive schemes that reward households and businesses that embrace environmentally responsible behaviour.

Describing recent trials where councils have offered rewards or tax rebates to households that recycle or invest in energy efficiency measures as " successful", Huhne said he wanted to see similar incentive schemes rolled out more widely.

He also made the economic case for a greater level of support for the low-carbon economy, arguing that the UK was already losing ground to China in the development of clean technologies.

"These are very fast-growing markets and it's crucial for our future that we're in the lead," he warned. "There is a lot going on in China – they are certainly ahead of us on solar cells; they are building pilot schemes of low-carbon cities across China. We must not be left behind."

Huhne is responsible for delivering the government's target to cut emissions from central government by 10 per cent during its first year in office and the Sunday Times reported that substantial changes have already been made at the Department of Energy and Climate Change to help meet the target, including limiting the amount of time air conditioners are on in the office.

He will also represent the UK at the UN's Mexico summit in November, but remains deeply sceptical that a deal can be reached this year, arguing that the ongoing stand-off between the US and China over emission targets is unlikely to be resolved within the next few months.