Budget must not slow Britain's eco progress

A green policy worth the name has got to get serious about energy conservation

The global debate about climate change is reaching another significant phase. On Thursday and Friday this week, European Union leaders meet in Brussels to discuss their position before a meeting with Barack Obama next week at an EU-US summit. That meeting will in turn prepare the ground for a United Nations super-summit in Paris in a year's time, at which a worldwide deal is supposed to be agreed.

But before all that, George Osborne, the British Chancellor, will stand up in the House of Commons on Wednesday to deliver his fifth Budget. This will be a moment of truth for the coalition. Is this the "greenest government ever", as David Cameron promised in its heady early days, or is it a government that wants to "get rid of the green crap", as he demanded in frustration last autumn after Ed Miliband clobbered him over the cost of gas and electricity bills? It it a government that takes a leading role in climate-change negotiations, in Europe and the world, or is it, as Mr Osborne implied, the slowest ship in the convoy? The Chancellor told the Conservative Party conference in 2011 that "we're going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe".

If it were not for the Poles, whose reliance on coal means that they are likely to block agreement in Brussels this week, there would be a danger in this Budget that the UK would become the back-marker, holding the rest of the convoy back. We can understand the political imperative to keep household bills down, and it makes sense to take green costs on to the shoulder of the general taxpayer rather than the energy consumer. But a green policy worth the name has to get serious about energy conservation. So far most of the Government schemes to encourage better insulation and low-energy products have been piecemeal and poorly designed. The energy companies complain of having to spend more on trying to identify "hard-to-help" households than on actually helping them cut their energy use, for instance.

The other test of the Budget is the Chancellor's treatment of energy-intensive industry. One of the ways in which Mr Osborne has hinted that he wants to slow down the green convoy is to give some relief to companies that use a lot of energy, which are beginning to complain about the EU regime designed to make carbon fuels more expensive. On this, the Government has to accept that a fiscal penalty for heavy use of carbon fuels is the point of policy. That is one of the main ways in which the emissions of greenhouse gases can be suppressed. Advanced economies such as those in Europe have to accept that their competitive advantage in the future is not going to come from smokestack industry, and that we lose nothing by seeking our advantages in the low-carbon technologies of the future.

It has to be recognised that the outlook for climate change talks in Brussels and beyond is overcast - clouded by austerity. The best that Ed Davey, the committed green Energy and Climate Change Secretary, can hope for is a "clear signal" from EU nations signing up for a 40 per cent cut in greenhouse gases by 2030 and a non-binding EU-wide target for renewable energy.

It is all the more important, therefore, that Mr Osborne is not allowed to slow down green progress further in this week's Budget.