Committee Reports > List of Committees > Joint > 2003 > Committee on Environment and Local Government > Report No. 01 - Proposal for the Introduction of a Carbon Energy Tax

Tithe an Oireachtais

An Comhchoiste um Chomhshaol agus RialtasÁitiúil

An Chéad Tuarascail

Togra maidir le Cain a Thabhairt Isteach ar Fhuinneamh Carbóin

Aighneacht chuig an Roinn Airgeadais

Meán Fómhar 2003

Houses of the Oireachtas

Joint Committee on the Environment and Local Government

First Report

Proposal for the Introduction of a Carbon Energy Tax

Submission to the Department of Finance

September 2003

Contents

1. Introduction

The Joint Committee on the Environment and Local Government was given the opportunity, as part of the consultation process initiated by the Minister for Finance on the proposal for the introduction of a carbon energy tax, to make a submission on the matter to the Department of Finance. The Joint Committee’s submission is being made by way of this report. The Joint Committee discussed the issue on three separate occasions:- on 9^th September to decide the way in which the submission would be formulated, on 18^th September to discuss, with core relevant organisations, the merits or otherwise of the proposal, and on 23^rd September to agree this report. In addition, the Joint Committee met with Representatives of Aughinish Aluminia on 25^th June 2003.

The Joint Committee, at the outset, in recognising that its primary focus is In the public affairs administered by the Department of the Environment, Heritage and Local Government and in view of the fact that the closing date for receipt of submissions is 30^th September and further that a number of other Oireachtas Committees were also considering the matter, concentrated, in the main, on the Impact on the environment of the introduction of a carbon tax.

2. Background-the need for action

The Joint Committee recognises that under the Kyoto Protocol and the EU burden sharing agreement Ireland is committed to limit the growth in emissions of green house gases to 13% above its 1990 levels in the period 2008-2012.

The Joint Committee recognises that climate change, whilst not as large an environmental problem, in the short term, as for example water quality and waste disposal, will have huge detrimental effects in the long term.

The Joint Committee acknowledges that Ireland’s emissions of greenhouse gases will by 2010 reach a level of 73.7 million tonnes.

The Joint Committee agrees that a business as usual scenario cannot continue in view of the fact that Ireland’s limit in 2010 will be 60.9 million tonnes.

The Joint Committee also agrees that to continue a business as usual policy would lead to a continuous and ever increasing burden on the Exchequer.

The Joint Committee recognises that emissions of greenhouse gases, which Heretofore could be considered a ‘right’, have now become a limited national asset.

The Joint Committee endorses the Government’s approach of a ‘polluter pays’ principle as outlined in the National Climate Change Strategy.

The Joint Committee acknowledges that Ireland’s emissions per capita are far higher than the EU average due to our dependency on fossil fuels.

The Joint Committee therefore realises that action should be taken by Ireland to reduce our emissions of greenhouse gases.

3. Reasons for introducing a carbon energy tax

3.1The Joint Committee acknowledges that studies performed in Ireland, along with experience in other EU States, show that the introduction of a carbon energy tax will lead to a decrease in emissions of greenhouse gases.

3.2The Joint Committee recognises that the price elasticity of demand for fossil fuels is central to bringing about a decrease in their use.

3.3The Joint Committee further recognises that the price elasticity of demand for fossil fuels increase from the short term to the long term, leading to the Committee’s preference for a phased introduction of a carbon energy tax.

3.4The Joint Committee recognises that the introduction of a carbon energy tax alone will not be sufficient for Ireland to meet its obligations to the Kyoto Protocol and it emphasises the need for the other specific measures, set out in the National Climate Change Strategy, to be pursued vigorously.

4. Recommendations of the Joint Committee

The Joint Committee recommends that a carbon energy tax should be Introduced in order to lessen our demand for fossil fuels and hence decrease our emissions of greenhouse gases.

The Joint Committee recommends that a carbon energy tax be introduced on a phases basis in order that the varying price elasticity of demand for fossil fuels is exploited fully.

The Joint Committee recommends that the emphasis should be placed on efforts to reduce Ireland’s emissions of greenhouse gases rather than exploiting international agreements by way of trading permits.

The Joint Committee, mindful of the fact that the introduction of a carbon energy tax will have a disproportionate effect on poorer households, recommends that the revenue raised by the tax be re-distributed to compensate households most affected by the tax through a combination of cuts in income tax, increased social welfare benefits and grants for converting their homes to more energy efficient means.

The Joint Committee recommends that those engaged in permit trading and also heavily investing in combined heat power (CPH) be exempted from paying carbon energy tax, at least, in the short term.

___________________

Seán Power, T.D.

Chairman

September, 2003.