European challenge to Britain on energy tax: Threat to agreement on greenhouse gases signed at Rio Earth Summit

SIX EC countries yesterday challenged Britain over the need for a new Europe-wide carbon and energy tax, threatening to pull out of the most important agreement signed at the Earth Summit if it does not go ahead quickly.

Britain has always been lukewarm about the idea of the EC taxing energy use and carbon dioxide production in an effort to limit the production of greenhouse gases and promote energy efficiency. This was emphasised by Norman Lamont last week. The Chancellor said in his Budget speech that while there might be a case, 'I remain unpersuaded of the need for a new EC tax'.

But at a meeting of environment ministers yesterday in Brussels, Belgium, Denmark, Germany, Italy, Luxembourg and the Netherlands said that without the tax, one of the key measures agreed at the summit last June would not work.

The UN Framework Convention on Climate Change, signed by dozens of presidents and prime ministers in Rio last June, calls on developed countries to stabilise their rising carbon dioxide emissions at their 1990 level by the year 2000.

All the EC countries have set targets for reducing their emissions of carbon dioxide, with the general aim of bringing them down to 1990 levels by the year 2000. But Britain appears to believe it can hit the target without a carbon and energy tax beyond the 17.5 per cent VAT on domestic fuel and power that Mr Lamont announced last week.

Mr Lamont added that 'individual countries should of course take their own measures to give people the right signals to encourage the efficient use of energy'.

Yesterday David Maclean, the Minister for the Environment and Countryside, emphasised that this was just what the Chancellor had done in the Budget through the imposition of VAT on power, and tax rises on petrol, though he admitted the controversial tax increases were 'not going to be universally popular'.

'If we want to meet the CO2 target, we can do so,' said Mr Maclean, adding that a carbon tax was 'an interesting concept' but 'not essential to meet our targets'. Ironically, the chances of such a tax have been raised recently by the decision of the US to back a similiar idea. But the six who made the statement yesterday clearly fear that Britain is going to try to block progress. Mr Maclean said: 'I don't think we should hide behind an EC-wide or a worldwide tax to meet our targets.'