LONDON (Reuters) - Chancellor Alistair Darling on Monday extended mandates for renewable energy by 10 years to 2037 but cut planned tax hikes on inefficient cars, juggling combined climate and recession fears.
Darling also announced a 535 million pound cash injection into rail transport, energy efficiency measures and environmental protection, as part of a plan to bring forward capital spending to boost demand in a flagging economy.
The renewable energy scheme sets mandatory targets for utilities to get electricity from low-carbon sources. It has been the main driver for green energy growth in Britain to date.
"Renewable energy along with nuclear power will play an increasing role in meeting our energy future," said Darling, announcing the ten-year extension.
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"By requiring energy companies to generate a share of energy from renewable sources, that obligation will underpin investor confidence and support the development of renewable energy."
The low carbon industry could generate an extra 1 million "green collar" jobs in the next 20 years, he added.
But green groups said Darling's ambition was too modest, failing to grasp the opportunity to boost a low-carbon economy.
"This was an historic opportunity to invest billions in a low-carbon, high technology future, but the Chancellor blew it," said Greenpeace's John Sauven.
Darling announced an additional 100 million pounds in new money and brought forward another 50 million to help up to 60,000 households insulate their homes.
"We want the most vulnerable homes to have the heating and insulation improvements they need as quickly as possible," Energy and Climate Change Secretary Ed Miliband said in a statement after the Chancellor's speech.
Darling said the government would monitor whether energy suppliers were passing on recent falls in wholesale prices to their customers, after loud public calls for taxes on windfall profits.
But he cut by one third a proposed increase in 2010 in taxes on gas guzzling cars, reflecting the difficulty of implementing costly climate measures during a slowdown.
"In the original proposal some cars would have seen increases by up to 90 pounds. Instead, I now propose that the more polluting cars will see their duty increase, but up to a maximum of 30 pounds, and less polluting cars will see no increase or a cut of up to 30 pounds," he said.
Air passenger duties would be banded to reflect the greater carbon emissions from longer flights. That contrasted with previous plans to scrap the duty in favour of a tax on flights.
Low car tax hikes reflected a squeeze on the climate agenda during recession, said Tim Yeo, who leads a committee of British lawmakers which scrutinises environmental policy.
"I'm quite concerned," he told Reuters. "There's a problem to keep climate change at the top of the agenda."
For full coverage of Darling's pre-budget statement, click on: http://uk.reuters.com/news/globalcoverage/pre-Budget2008
(Reporting by Gerard Wynn and Daniel Fineren)
