Carbon price seen vital but inadequate

By Jeremy Lovell

LONDON (Reuters) - Achieving a high and stable price for carbon is vital but inadequate on its own in the bid to beat climate change, British business leaders said in a far reaching report on Monday.

Governments had to use regulation and taxation to reinforce the move from a high to a low carbon economy, and consumers had to be given much more information to help them make product and lifestyle choices, the Confederation of British Industry said.

"The carbon price is essential but on its own it is not enough," said Ben Verwaayen, chief executive of telecomms giant BT and chairman of the group of chief executives the CBI brought together to write the 52-page report.

"You need governments to create the appropriate policy and regulatory framework, and to empower consumers so they feel part of the picture," he added at the launch of the report.

Environmentalists welcomed what they said was a major change of heart by business leaders who until relatively recently had campaigned against environmental taxes.

"We welcome the CBI's strong message to Government that urgent action is needed on climate change, and the CBI's own commitment to 'do what it takes'," said Friends of the Earth climate campaigner Simon Bullock.

"This report would seem to signal a fundamental change in their thinking on climate change," he added.

Britain's climate ambassador John Ashton told Reuters last week the move to a low carbon world economy would be tough.

"That is the most ambitious, the most complex, the most difficult piece of diplomacy that humanity will ever have attempted," Ashton, a senior foreign office official, said.

With the notable exception of California, which is pioneering tough environmental laws, most governments have shied away from laws and rules on carbon emissions and climate-related product standards, opting instead for voluntary agreements.

KYOTO SUCCESSOR

The CBI report, written by the heads of 18 leading British businesses -- all with global connections -- coincides with the start of the CBI's annual conference and comes just a week before a major meeting of UN environment ministers in Indonesia.

The meeting on the island of Bali is designed to kick off two years of talks to agree a successor to the Kyoto protocol on cutting carbon emissions that expires in 2012 with, to date, no meeting of minds on its shape, scope or content.

But the CBI reports sets a path for at least the British government to follow, calling for expansion and extension of the European Union's carbon emissions trading scheme and urging a carbon price of 40 euros a tonne -- double the current level.

It says research and development spending need to rise sharply and target energy efficiency and low carbon technology, planning and building regulations need to emphasis low carbon and there should be statutory limits on vehicle emissions.

"This is about government setting a framework, business to deliver and the consumers to be empowered," Verwaayen said. "Only if we get the interaction between the three will we see the results that we need."

"This report says it is doable for an affordable price if we take action right now," Verwaayen said.

The report said Britain was now certain to miss its own target of cutting climate warming carbon emissions by 26-32 percent by 2020, but if action was taken now it could hit 30 percent 10 years later and 60 percent by mid-century.

A Climate Change Bill published last week sets a legal target for Britain to cut national carbon dioxide emissions by 60 percent by 2050.

Prime Minister Gordon Brown has said he would ask a new climate committee to look at raising the target to 80 percent.

(Reporting by Jeremy Lovell; editing by James Jukwey)