Cameron proposes new carbon levy

David Cameron will today pledge to scrap the climate change levy as part of his drive to prove the Conservatives are serious about the environment.

Labour have held up the Tories' opposition to the levy, a tax on energy consumed by business, as proof that their claim to be green is nothing more than words.

In a speech in New York last night, Gordon Brown held up the measure once again as a major factor in Britain's ability to meet the Kyoto target of cutting carbon emissions by 12.5 per cent by 2010.

But speaking in Norway later today, the Conservative leader will outline his plans to replace the current system with a carbon levy, which takes into account whether the energy used is producing low or high levels of carbon dioxide – a major greenhouse gas.

He has asked the Tories' quality of life policy group to look at whether this should take the form of a business tax or a market mechanism similar to the emissions trading scheme (ETS), where firms would have tradeable carbon energy credits.

The levy would be part of a wider framework of carbon pricing across the economy, where activities which produce more carbon emissions would cost more, and those which produce fewer would cost less.

"Tackling climate change will require genuinely fresh thinking," Mr Cameron will say, after a day spent looking at the erosion of the glaciers in the Arctic.

"We must not be afraid of using the tax system and market mechanisms to encourage investment in, and take up of, clean new technologies which will transform the way we do business, create new markets, and reduce our impact on the planet."

The Tory leader will also propose Britain adopt a more decentralised way of providing energy, scrapping the system of major electricity plants in favour of more local plants that could be produced by the communities it services, and deliver energy more efficiently.

"I want to recapture climate change from the pessimists. Of course it presents huge challenges, of course the issues are complex – but when I think about climate change and our response to it, I don't think of doom and gloom, costs and sacrifice," he will say.

"I think of a cleaner, greener world for our children to enjoy and inherit…and I think of the exciting possibilities that may seem a distant dream today – changing the way we live to improve our quality of life."

Mr Cameron has come under fire for taking time out to visit Norway when the local elections are just weeks away – there have been some good photo shots of the Witney MP riding a sledge with huskies, but some believe he should be hitting the campaign trail.

However, the environment is a major part of his effort to prove the party has changed, in particular given the emphasis placed on the issue by both Labour and the Liberal Democrats.

In his speech to the UN yesterday, the chancellor insisted that economic growth and environmentalism were not incompatible – in fact, they "now increasingly reinforce each other".

"It is now clear that, if current trends are left unchecked, the economic costs of climate change will be far greater than previously though," he said.

"And yet at the same time, it is becoming evident that the means of tackling it are increasingly available and the costs could become affordable – and that tackling it offers real economic benefits and opportunities to developed and developing countries alike."