LATEST figures from the Society of Motor Manufacturers and Traders (SMMT) show that, after six years of falling carbon dioxide (CO2) emissions from new privately-owned vehicles, car buyers are once again opting for larger, inefficient vehicles that pump out higher levels of CO2.

This is a worrying trend that has been compounded by an increase in the number of vehicles on Britain’s roads and the fact that vehicles in general are being used more often.

But this development has not been echoed in the company car market. In fact CO2 emissions continue to fall in this sector – a clear indication that CO2-based company car tax really works.

The Energy Saving Trust (EST) is therefore urging the Government to radically reform Vehicle Excise Duty (VED) with much larger differentials between cleaner vehicles and the worst gas guzzlers to encourage more drivers to opt for fuel-efficient vehicles.

A graduated system of Vehicle Excise Duty based on CO2 bands was first introduced in March 2001, with the aim of putting CO2 emissions at the heart of private car taxation for the very first time.

However, the recent increase in CO2 emissions from privately-owned vehicles clearly shows that this system lacks teeth, and fuel tax cannot be relied upon alone to drive this change in behaviour.

This is because the maximum VED differential between the best and worst is currently just £115, and over a quarter of new cars for sale in the UK actually fall into the highest band F (185g/km CO2).

There is no real financial benefit for those drivers who opt for more efficient larger vehicles over the high-emitting 4x4s or performance vehicles. EST is therefore calling on the Government to target drivers of the most inefficient vehicles by:

Increasing the differentials between VED bands, with the ‘greenest’ Band A cars paying no VED or receiving a tax bonus under a ‘feebate’ scheme.

Setting a new top Band G for vehicles with emissions higher than 210g/km CO2. Almost half the sales currently falling into the top Band F would fall into this new band.

EST does not expect these measures to be introduced overnight. It sees them rather as future standards to be gradually phased in and to further encourage manufacturers to make vehicles that are more efficient as well as fulfilling popular size and style requirements.

Likewise, EST is not proposing yet another Government tax-and-spend initiative. But if we do not begin to see a dramatic reduction in CO2 emissions from transport, industry and homes we will not meet our Kyoto targets. As a nation, we will continue to deplete the world’s fossil fuel supplies and add to climate change problems.

This call is just one of many initiatives EST is currently exploring, as set out in its recent Agenda for Change and it realises that it isn’t a ‘fix all’ solution. However, if the Government is serious about cutting the UK’s CO2 emissions then it must make driving efficient cars a more financially beneficial prospect.