Pre-Budget Statement: Environment: Heavy industry absolved from full effects of anti-pollution energy tax

GORDON BROWN continued to build a reputation as the Green Chancellor, announcing a number of measures designed to help the environment, welcomed by both industry and environmentalists.

He is pressing ahead with an energy tax, one of the Government's main weapons in the struggle to cut carbon dioxide emissions, providing a massive sum for energy-efficiency technology, and ring-fencing future money from petrol duty for transport investment.

Mr Brown pleased the Green lobby by resisting attempts to get him to drop the energy tax, which much of Britain's heavy industry has regarded with dread. Environmentalists were also happy at his proposal to exempt renewable energy and the energy- efficient technology known as combined heat and power.

However, he pleased industry by making significant concessions to the most energy-intensive sectors, such as steel, aluminium and cement companies. This will slash the tax take from the proposed figure of pounds 1.7bn annually to pounds 1bn. All the money will be recycled to firms in reduced national insurance contributions.

The Chancellor thinks that bringing in energy-saving schemes will produce much greater cuts in the CO2 emitted from power-station chimneys than previously thought. He said he now thinks the tax can cut 2bn tonnes of annual emissions from smokestack firms, rather than the 1.5bn tonnes estimated earlier this year.

But Mr Brown called a halt to the fuel duty escalator, the automatic annual rise in petrol tax by 6 per cent over inflation.

He delighted environmentalists by trebling the moneyavailable for energy- efficiency schemes from pounds 50m to pounds 150m.

"We are in general very pleased, although the devil will be in the detail of these policies," said Dr Ute Collier, head of climate change at the World Wide Fund for Nature.

"Mr Brown has gone a long way to meeting our concerns," said Michael Roberts, head of industry policy at the CBI.

Michael McCarthy