The chancellor chose to tackle building emissions with tax breaks on zero-carbon homes
Demonstrating his 'carrots and sticks' approach to environmental policy the Chancellor announced a series of tax breaks and 'green taxes' that grow with environmental impact to encourage people to buy energy-efficient homes and vehicles.
Zero-carbon homes costing under £500,000 will be exempt of stamp duty while those costing over half a million will benefit from a £15,000 reduction in tax liability, the Chancellor announced, filling in the details on measures announced in December's pre-budget report aimed at making all new homes zero-carbon within a decade.
As well as energy efficiency, the budget also contains measures designed to get householders generating their own green electricity. The 2007 budget gives funding for micro-generation through the Low Carbon Buildings Programme a £6m boost, bringing available funds up to a total of over £18m.
Measures aimed at cutting home emissions - contributing around a quarter of the UK's carbon - included:
- £300-£4,000 in grants for pensioners installing insulation and central heating
- Government to work with banks and building societies to develop new 'green' mortgages
- zero stamp duty rate for new zero-carbon homes under £500,000 until 2012
- £6m boost for the Low Carbon Buildings Fund
Besides homes, cars were the other big area of Briton's carbon footprint the Chancellor chose to tackle. Vehicle excise duty for the most polluting vehicles will almost double to £400, while excise duty for the cleanest falls to £35 over the next three years.
But while the Chancellor tried to encourage people to buy cleaner vehicles, he postponed this year's increase of 2 pence per litre in fuel duty rates until 1 October 2007. In the following two years fuel duty will rise by only 2ppl and 1.84ppl respectively.
Biofuels will be given a helping hand with a package of measures and an extension of the 20 pence per litre biofuels duty differential to 2009-10.
The Chancellor also announced plans to develop the UK's first new carbon capture and storage facility, with the developer chosen through a competition.
Environmental group Friends of the Earth welcomed the green measures included in the budget but said they were not enough.
FoE Scotland's Duncan McLaren said: 'Today's Budget contains some welcome steps toward a greener economy, but falls short of the measures required to really tackle climate change. With the threat of climate chaos growing daily now is the time for bold leadership, not half measures.'