The Government is pressing the EU to set stricter caps on national allowances under the EU Emissions Trading Scheme (EU ETS) to ensure there is a scarcity of allowances in Phase II of the EU ETS (2008-2012).

The Government will be auctioning 7% of allowances in the UK's National Allocation Plan (NAP) for Phase II of the EU ETS, as well as any allowances from site closures or surplus from the New Entrants Reserve (rather than awarding those allowances to the relevant companies for free).

The Government indicated that it will be making greater use of auctioning of national allowances under Phase III of the EU ETS (2013-2017).

The Government continues to be a firm supporter of the European Commission's plans to include the aviation sector in the EU ETS (see Legal update, Controversial draft Directive on inclusion of aviation in EU Emissions Trading Scheme).

The Government will host an international conference on the development of a global carbon trading market in London in November 2007. The conference is expected to focus on how to link the EU ETS to carbon trading markets in other countries.

The Government aims to make London the world's leading centre for global carbon trading (see HM Treasury press release).

The European Commission is expected to publish, in December 2007, its proposals on the future of the EU Emissions Trading Scheme post-2012.

For further information on:

The Government indicated that the Secretary of State for Business, Enterprise and Regulatory Reform will be announcing today (9 October) details of a competition for a demonstration project on carbon capture and storage (CCS) and that there will be a short period of discussion with industry prior to the formal start of the competition in November 2007. However, these details are not yet available on the Department for Business, Enterprise and Regulatory Reform's (BERR) website. PLC Environment will alert subscribers when these details become available.

For further information on CCS, see Practice note, CCS - Carbon capture and storage.

The Government will make £1.2 billion available to create an Environmental Transformation Fund (ETF) to support (among other things) demonstration projects and the commercialisation of new low carbon energy technologies in the UK. The ETF will be funded by both BERR and the Department for Environment, Food and Rural Affairs.

For further information, see BERR press release.

The ETF will support the work of the Energy Technologies Institute (ETI). The ETI is a new 50:50 public-private partnership (including BP, Shell, E.ON and EDF Energy) aimed at raising up to £1.1 billion over a 10 year period for low-carbon technologies. The ETI is expected to be operational in 2008.

For further information, see BERR website: ETI.

The Government will publish a new strategy on low carbon energy technology in 2008.

The Government published the interim report of the King Review on vehicles and fuel technologies which could help reduce carbon dioxide emissions from the road transport sector in the UK over the next 25 years. The final report, including recommendations, will be published in time for the 2008 Budget.

The interim report of the King Review indicates that:

For information on the European Commission's proposals on increased efficiency of cars and fuels, see:

The Government announced that:

In the 2007 Budget, the Government launched a consultation on tax relief for the remediation of contaminated land and an extension of the landfill tax exemption for waste arising from the remediation of contaminated land.

The Government has announced in the 2007 Pre-Budget Report that responses to that consultation supported the proposed reforms and that it will consider further reforms in these areas to bring more brownfield land back into effective use. The Government intends to publish responses to the consultation shortly and make further announcements in the 2008 Budget.

For further information on the Government's proposals, see PLC Property, Legal update, Budget 2007: Contaminated land.

The Government confirmed that, from 1 April 2008 until at least 2010-2011, the standard rate of landfill tax will increase by £8 per tonne each year and the lower rate of landfill tax will increase from £2 to £2.50 per tonne.

For further information on the landfill tax, see Practice note, Landfill tax.

From 30 October 2007, the landfill tax exemption will be extended to include treated waste from dredging. For further details, see 2007 Pre-Budget Report - PBRN 26 and the draft Landfill Tax (Material Removed from Water) Order 2007.