SARAH NELSON: Policy makers are waking up; governments have to take action now to minimise the impact of global warming such as rising river levels and new extremes in the weather. Two years ago in Kyoto world leaders promised to cut emissions of greenhouse gases - with Britain saying it would take the lead in setting tougher targets. Now the question being asked is can the government deliver? CHARLES SECRETT: In most areas where they need to take action they haven't and those promises remain unfulfilled, unredeemed and that's not good enough. MICHAEL JACOBS: The whole point about climate change is that it's a long term project. We have to engage in serious reductions now because what's coming in the future are more stringent targets; and it's absolutely central I think that the government does not back down ALAN WHITHEAD: I think the danger is that the policy will peel away bit by bit as daily concerns are addressed and it's not a policy you can peel bits away from really if it's to work. NELSON: Three hundred tonnes of molten metal go into the furnace. But at the Port Talbot steelworks in South Wales generating the energy to make steel releases large amounts of greenhouse gases. Since Kyoto the government's been legally bound to reduce carbon dioxide emissions by twelve and a half percent by 2010, though it said it'll go even further and aim for a twenty per cent cut overall. The government's strategy for reducing carbon dioxide emissions over the next ten years starts here - if industry can cut the amount of fuel it burns and develop greener methods of production, it will go a considerable way to helping Britain meet that twenty per cent target, so the government is planning a new tax - the climate change levy - and it will mean that companies will pay according to the amount of energy they use. At Port Talbot, the tax is very controversial; it means the price of the steel coils they produce here will have to go up by three pounds a tonne. British Steel recently merged with a Dutch company, to form a new group, Corus, and in Holland there's no such charge. In a highly competitive global market, that could put British jobs at risk. BILL BRIGNALL: Even at the minimum rate of tax, we will pay, fifty-five million pounds a year because of the energy carbon tax. The average in Europe is eight million pounds. Now in an industry where quality and delivery are accepted, and steel is bought on price then we are at a disadvantage to the continental producers, and that is damaging our competitiveness. NELSON: At the moment the climate change levy isn't in its finished state, and the steel industry isn't the only one lobbying for changes before the levy's finally rolled out in 2001. Many Labour MPs are also unhappy at the impact it could have on manufacturing; and there are signs the government is sympathetic to the need to protect jobs. The Chancellor is expected to announce more details of how the levy will work in the pre budget report next week. But environmentalists are concerned that a major plank of the Government's climate change strategy is in danger of being undermined. JACOBS: When you introduce a new measure such as the climate change levy, the energy tax, business will naturally say we're going to lose competitiveness. I think the government needs to be very strong on this one, because actually there are real opportunities here too. SECRETT: Whether the climate change levy is going to be really meaningful or not in terms of Britain delivering on real reductions in greenhouse gas emissions all depends on how it's designed and how it's targeted. If the worst elements in heavy industry win the battle that they are currently fighting, there is a very real danger that they could gut the levy. ANDREW BENNETT: First of all when you actually look at quite a lot of companies' bottom line there isn't as much money involved as they're saying there is but secondly if you can find more energy efficient ways of doing the same thing you put yourself in a very good position competitively in the world, and it's a question of do we do it or do the German companies do it, perhaps do some of the French and Scandinavian countries. NELSON: What could be greener than wind farms? An hour away from the steelworks, in the heart of the Welsh countryside, this is the energy of the future - cheap, green, and renewable. Since the early nineties around forty wind farms have sprung up all over Britain and each one of them can supply electricity to around seven thousand homes, but so far in Britain only two per cent of our electricity needs are met by wind farms and other renewable sources, and the government wants to raise that to ten per cent by the year 2010. The trouble is, some say, the Government policies are actually working against this industry. One major problem is again the climate change levy - as it stands, renewables will be taxed just like every one else. WHITEHEAD: The Climate Change levy in the medium term needs to ensure that it works alongside achieving the renewables' target so that renewables are as far as possible exempted from the levy. Now it's difficult in terms of the way the tax is structured at present clearly to identify when someone is using renewable source and when they're not using renewable source, I don't think that's impossible to determine BENNETT: I don't think it should be applied to renewables. I think that is a mistake as far as I'm concerned. I understand the arguments and I also understand the difficulties, but once you've said you're going to exempt the domestic side from that sort of tax there is some problems with it, but I think that on the whole we're moving in the right direction, and I certainly hope the Government is going to come up with a concession as far as renewables are concerned. NELSON: The government's also being urged to do much more to encourage the renewables sector. It may sound funny, but Britain has the natural advantage of forty per cent of all the wind in Europe; yet we're lagging behind in the development of wind energy, because many people don't like the turbines in the countryside. SHEARS: It's a sad story really.. because we've been looking at wind energy all through the nineties in the UK, and in the early part of the 90's we had a very high success rate with projects, eighty or ninety percent. What we've seen in the last three or four years is schemes at both the local level and at public inquiries, the great majority up to ninety per cent being turned down and that simply is a totally unsustainable thing for the industry and simply won't get us anywhere near the targets. BENNETT: It's quite clear that the Danes have got the technology now and we could follow them still following rather than setting the lead in very substantially increasing the amount of our energy produced from offshore wind. NELSON: So that's a missed opportunity at the moment from the Government.? BENNETT: It's one of those where we could do better. NELSON: At the Earls court motor show, the cars of the future. Who could fail to be dazzled by the huge range of vehicles on display. Thousands of people come to see close up cars they can only otherwise dream about. This is one of the trickiest area for the government if it's serious about climate change. Cars on the road contribute around a fifth of all the carbon dioxide emitted in the UK and government figures show road traffic is set to rise. Ministers have to discourage us from using our cars. They hope to have a bill in this years' Queens Speech which will aim to get more people onto public transport. But how serious are they about reducing road traffic, when for many of us the car represents freedom and status? SECRETT: The Government have got to bite the bullet and to redeem those pledges have got to make as a centrepiece of an integrated transport bill a national road traffic reduction target to co-ordinate a coherent transport strategy; that should be the overall aim and goal equivalent to the twenty per cent carbon dioxide reduction target. WHITEHEAD: Even if we make cars more efficient the simple growth of cars will cancel out pretty much all the savings we're making on emissions by for example having more efficient engines so there's no getting away from the fact in the medium and long term the government is going to have to say to people - 'Use your cars much more sensibly' and that is a policy which is going to offend some people. NELSON: Greener cars are attracting interest - but even the very young aspire to car ownership, and so far the government's using taxes to promote greener methods of transport, as well as discouraging car use altogether. Electric cars haven't yet taken off, despite higher petrol prices. The policy of increasing fuel by inflation plus six percent is minister's way of encouraging the switch to smaller, more efficient vehicles. But cost and performance are what matter - and that's put government under pressure to change its policy on fuel prices. Green may be all well and good - but business in particular is lobbying hard for the end of the fuel escalator. WHITEHALL: The Government can't afford to adopt as some people are suggesting, a policy of cheap petrol. It is simply not on to suggest to people over a period of time that they can actually just fill their tanks with cheap petrol and drive where they want to do. BENNETT: I don't think the Government should drop the fuel escalator. What it should do is to look at the consequences of it. Now I think what they've got to do is to say very firmly - some of the income that's coming from it is going to be recycled if you like to those people who are suffering most so you continue with it, you try and persuade those people who can trade down to a smaller car who can drive within the speed limits that they can make the savings but as far as people on low incomes, they get it back. SECRETT: The Road Haulage Lobby, large sections of the motor lobby are vigorously resisting any increases in the road fuel duty escalator and are trying to get it clawed back. If the Government go down that route then they will send a very damaging signal out to the rest of society and internationally about how serious they are in tackling environmental problems like climate change. NELSON: The test for the Government is how far ministers will risk unpopularity now, when the gains in terms of the effect on the environment can only be measured in years to come. Some say getting the public to look at cars in a different light isn't the immediate problem. At Whitehall there are real difficulties, if the climate change strategy is to work. BENNETT: John Prescott is not naturally green but he's looked at the issues and he understands the issues and he's come up with some very good policies. I fear that there are one or two ministers that are rather younger, perhaps have got better understanding originally of the green issues but are a little bit more disappointing in government and that particularly means that the Chancellor's got to come up with a green budget which there's some hints that he's going to do this year and I think that quite a few other departments, particularly the Department of Trade and Industry has got to look at all their policies about being green. WHITEHEAD: If the Government does make concessions for example on the growth of cities and towns, it makes too many concessions as far as the fuel energy taxes are concerned, it makes concessions in terms of the fuel escalator then the policy will be in danger of being stillborn and it is a policy that is going to hit this Government very badly on the back of the head in the second Labour Government if we are not well on track to meeting the targets that we as a Government have ourselves set. NELSON: Climate change affects us all, and ministers say they want to put the environment at the heart of government.. They're at a crucial stage in the development of their policies. The next few weeks will show if they're ready to meet the challenge of global warming.