The government should use taxation to push the economy towards a more environment friendly basis.
That is the view of Lord Adair Turner, the head of the Financial Services Authority (FSA).
In a radio interview, Lord Turner said: “If we have to raise taxes, we can deliberately design those to tax bad environmental things, like overuse of fossil fuels, rather than good welfare-enhancing things, like employment for people.
“There is therefore a very strong argument whenever one is in the environment of tax rises for trying to make them skewed as much as possible to things that make sense in the long-term.”
Lord Turner also suggested that the government may need to intervene directly in efforts to boost investment in low-carbon, energy-efficient industries and technologies.
He continued: “I don’t think we should exclude the possibility that we may need to think about whether we need more direct, public supported investments in low-carbon electricity generation if we find that the market isn’t directly delivering that.
“So concepts like investment banks or elements of guarantee, or particular categories of bond finance, I think are within the set of things that we should think about.”