EU warns of four-year delay to carbon trading scheme

Tony Blair's plans for aviation to be included in the EU carbon trading scheme are likely to be delayed until the end of the decade, senior EU figures said yesterday.

The disclosure of the delay of up to four years in the aviation scheme will open the Government to renewed charges of talking tough, but doing too little. The Stern report this week warned that urgent action was vital to avert a climate change disaster.

A climate change report published by the Institute for Fiscal Studies today attacks the Government for going soft on "green taxes". The report says, for most passengers, the rate of Air Passenger Duty was halved in 2001. The cut in the VAT rate on domestic fuel from 8 per cent to 5 per cent in 1997 helped the poor, but it had negative effects on the environment.

Mr Blair will meet Angela Merkel, the German Chancellor, in London today to discuss plans for putting climate change at the top of the agenda for Germany's presidency of the G8 industrialised countries next year. She supports the inclusion of aviation in the carbon trading scheme.

Aviation is one of the fastest-increasing contributors to climate change.Projections suggest that the EU countries will cut CO2 emissions by only 0.6 per cent on 1990 levels by 2010. That is short of their commitment under the Kyoto agreement to a cut of 8 per cent by 2012.

The European Commission will put forward formal proposals on aviation in December, but a battle is looming over the scope of the measures. European member states are divided as to whether the system should apply to incoming or outgoing flights or both.

The issue could be further complicated by pressure from the European Parliament and from environmental groups to set up a separate emissions trading system for aviation which would crack down harder on pollution from airlines.

In the meantime some countries, including Germany, may move to expand the measure to incorporate internal flights, although they will not be able to apply it to international journeys.

Mr Blair has set himself the task of negotiating a replacement for Kyoto agreement after 2012 before he retires from office next year.