The Government has stepped up its focus on alternative fuels through tax incentives as part of a long-term drive towards a zero emissions transport system.
Last year, Environment Minister Michael Meacher said the Government was committed to pushing for a switch away from the internal combustion engine.
He added that an 'early shift' to non-oil based transport was essential to tackling global warming in the Government's report called 'Action to Tackle Global Warming.'
A new draft strategy document, called Powering Future Vehicles, is being prepared which will examine which fuels to encourage through tax incentives and which fuels to discourage using increased taxes.
A Treasury spokesman said: “The Government is committed to promoting the development and take-up of next generation low-carbon vehicles. It recognises that early and clear fiscal incentives can have an important role in encouraging this development.”
Additionally, Chancellor of the Exchequer Gordon Brown has revealed further details of three pilot schemes to test alternative fuels as part of the Green Fuel Challenge unveiled last year, which invited bids for projects to support in July.
The schemes, which will test hydrogen, biogas and methanol, will be exempt from fuel duty, building on duty discounts for biodiesel and gaseous fuels announced in the 2001 Budget.
The Treasury spokesman added: “We intend to give further tax incentives for environmentally-friendly investments by business in the form of enhanced capital allowances during 2002-2003 for selected technologies in three key areas - energy saving, clean fuels and vehicles and improving water use and water quality.” (December 4, 2001)