Money received by the government from auctioning carbon emission permits should be used to tackle climate change, business and environment groups claim today.
The Confederation of British Industry (CBI) and WWF-UK say the government will receive £1.6 billion from selling permits between 2008 and 2012.
These permits are issued as part of the EU's Emissions Trading Scheme, which puts a price on carbon that businesses use and creates a market for carbon.
In a letter to the prime minister, WWF-UK, Energy Research Partnership and the CBI say there is a "tremendous opportunity" for the government to demonstrate its commitment to tackling climate change by channelling money from permits to helping the environment.
They argue a "substantial" amount of money is needed to pay for an investment programme in green technologies to ensure the UK does not fall behind other countries in green research and development.
"We believe that climate change can be mitigated and the UK can meet its long-term emissions targets," the letter states.
"But doing so will require imagination, innovation and, in particular, investment from across the public and private sectors."
CBI director-general Richard Lambert commented: "If the government does not recycle the revenue from its carbon permit auctions into green measures then it risks undermining the trust of business and the public in green taxes."
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