Tory leadership hopeful Rishi wanted a green tax on fuel as Chancellor (but No10 blocked it)

Rishi Sunak privately lobbied for the introduction of a green levy on fuel last year when he was chancellor, it emerged yesterday.

The Conservative leadership candidate, who has attracted the most votes from Tory MPs going into the second week of the race, proposed a ‘fossil fuels emissions trading scheme’.

But the former chancellor’s suggestion was shut down by other Cabinet members and outright rejected by Boris Johnson, it was reported. The levy would have added hundreds of pounds to annual fuel bills for motorists, a source said.

Mr Sunak has already come under pressure to pledge tax cuts and present ideas to ease the cost of living crunch during the leadership campaign, but has been more reluctant than his rivals to make policy commitments.

His spokesman said last night: ‘This was part of work looking to expand our emissions trading scheme to make our country greener – an agenda that was championed by No 10. Officials explored many options, as they always do, and it was not taken forward.’

Mr Sunak’s suggestion, drawn up by the Treasury, intended to put a price on pollution coming from road transportation, shipping, diesel trains and heating buildings, which make up more than 40 per cent of the UK’s carbon emissions.

Proposed just months before the UK hosted the Cop26 climate summit in Glasgow in October last year, the plan was meant to shift responsibility for carbon emissions on to fuel importers and refiners, rather than the burden falling primarily on end users.

In order to encourage a shift towards green energy on the way to achieving the Government’s net zero commitments by 2050, firms would be forced to buy an allowance to cover any emissions created from the burning of the fuel they sold.

Mr Sunak proposed to set an annual cap on these emissions, which would gradually reduce every year, Bloom berg reported.

But the plan was opposed by senior members of the Government, with Business Secretary Kwasi Kwarteng and Mr Johnson suggesting the costs of the levy would be passed on to consumers at a time when the price of fuel was already rising.

Mr Sunak had been under pressure from Tory backbenchers to go in the other direction and slash fuel duty for motorists, currently paying record prices at the petrol pump.

He announced a 5p cut on fuel duty in his Spring Statement, but this has not prevented prices from inching towards £2 a litre at a time when other household bills are soaring.

Last month, before he quit as chancellor, Mr Sunak admitted the measure was ‘not being felt at the pumps because of the rise in wholesale prices’. But he has not pledged to cut fuel duty further, unlike some of his leadership rivals.

He is also refusing to scrap the green levy on energy bills, which helps fund investment in renewable energy, whereas Liz Truss and Kemi Badenoch have pledged to do so.

Nor has Mr Sunak committed to immediate tax cuts, saying he would only slash rates ‘responsibly’.