Mary Flaherty
Question:5 Miss Flaherty asked the Minister for Energy if he will make a statement on the Government's attitude to current EC proposals for a CO2 tax and its effect on the energy sector of the economy.
Ceisteanna—Questions. Oral Answers. - EC Energy Tax Proposals.
Gay Mitchell
Question:17 Mr. G. Mitchell asked the Minister for Energy if he will make a statement on the Irish Government's position on the proposed EC carbon tax and its impact on Irish energy policy costs.
Tom Enright
Question:18 Mr. Enright asked the Minister for Energy his views on the impact of the EC decisions regarding stabilisation of CO2 emission by the year 2000 and the implications of this for Irish energy which is substantially reliant on carbon fuels.
Enda Kenny
Question:19 Mr. Kenny asked the Minister for Energy his views on the impact of the EC decisions regarding stabilisation of CO2 emission by the year 2000 and the implications of this for Irish energy which is substantially reliant on carbon fuels.
Richard Bruton
Question:23 Mr. R. Bruton asked the Minister for Energy if he will make a statement on the Irish Government's position on the proposed EC carbon tax and its impact on Irish energy policy costs.
Joseph Doyle
Question:25 Mr. Doyle asked the Minister for Energy his views on the impact of the EC decisions regarding stabilisation of CO2 emission by the year 2000 and the implications of this for Irish energy which is substantially reliant on carbon fuels.
Roger T. Garland
Question:43 Mr. Garland asked the Minister for Energy the reason for his views that the proposed EC energy tax would have serious implications for this country.
Fergus O'Brien
Question:46 Mr. O'Brien asked the Minister for Energy whether he attended the recent meeting of EC Energy and Environment Ministers which considered the proposals in relation to a carbon tax; and if he will outline the impact which the Government made into the development of this policy.
Austin Currie
Question:48 Mr. Currie asked the Minister for Energy if he will make a statement on the implications for Irish energy policy of the EC decision to impose a substantive CO2 tax between 1993 and the year 2000.
Ivan Yates
Question:55 Mr. Yates asked the Minister for Energy if, in light of the EC targets of stabilisation of CO2 emissions by the year 2000, he will give an assurance regarding the future of the Irish peat energy programme.
Paul Connaughton
Question:65 Mr. Connaughton asked the Minister for Energy if he will make a statement on the Irish Government's position on the proposed EC carbon tax and its impact on Irish energy policy costs.
Proinsias De Rossa
Question:67 Proinsias De Rossa asked the Minister for Energy if he will outline the implications for national energy policy of the recent proposal put forward by the European Commission to levy a tax on oil, coal and other fuels which produce carbon dioxide; and if he will make a statement on the matter.
Mary Flaherty
Question:91 Miss Flaherty asked the Minister for Energy if, in light of EC requirements to reduce CO2 emissions by the year 2000, he will outline his views on the manner in which Ireland's energy sector will participate in this reduction.
I propose to take questions Nos. 5, 17, 18, 19, 23, 25, 43, 46, 48, 55, 65, 67 and 91 together.
Deputies will be aware that the last Joint Energy/Environment Council, held in October 1990, agreed on stabilisation of CO2 emissions by 2000 at 1990 levels in the Community as a whole based on equitable burden sharing. Recently the EC Commission approved a communication to Council on "A Community Strategy to limit Carbon Dioxide emissions and to improve energy efficiency". The document contains many proposals to achieve stabilisation of CO2 emissions by 2000, including policies such as energy efficiency and conservation and switching to cleaner fuels. It also suggests consideration of a new fiscal initiative in the form of an energy CO2 tax.
The communication has been presented by the Commission to Councils of Environment Ministers, EcoFin Ministers and Energy Ministers. An ad hoc Energy/Environment Working Group has begun consideration of the communication preparatory to a Joint Energy/Environment Council scheduled for December. I have every intention of participating in the Joint Councils deliberations. A fiscal working group has been set up also to complement the work of the joint working group and to report to the EcoFin Council in December.
The issues raised in the document are fundamental and extremely complex and must be considered from many angles. They range for example, from elements of existing policy such as energy conservation and efficiency and renewable energy policy to new emphasis away from carbon fuels, particularly solid fuels on which we are substantially dependant. They also include proposals for a tax on energy which would have serious consequences for industrial development, transport and the economy generally. The implications of such proposals, particularly the taxation element, for the cost of energy, security of supply, effects on the development of our own indigenous resources of peat and gas, investment in fuel switching and the competitiveness of the Irish economy will all have to be considered and weighed against the contribution towards reduced CO2 emissions and improvement in the environment. Specifically, their contribution towards the target of stabilisation of CO2 emissions by 2000 at 1990 levels will have to be considered very carefully.
An assessment of these far-reaching proposals is taking place at present between the relevant Departments including the Department of Energy. The ESRI are also examining the proposals separately and have published their preliminary findings. Indications at this stage are that the tax proposals would significantly increase energy costs and prices particularly for electricity consumers, transport users and for low income households and have only modest direct effect on limiting CO2 emissions. The overall impact on the national economy would depend on the nature of measures taken to utilise the proceeds of the tax.
The stance adopted by the Community in relation to the Commission's proposals must also take into account the position likely to be adopted by other major industrial countries. As there are many uncertainties affecting this question, it is important that the community should adopt a flexible strategy and avoid a position which might be incompatible with that of other major players, and put the Community at a disadvantage in terms of competitiveness, job creation and energy security. I have said at the Energy Council on 29 October last that this is a global problem and solutions must be of a global nature and broadly acceptable to all.
The Minister has the advantage of having been at these councils, but is it not now a racing certainty that we will have to cope with a tax of this nature on the scale being proposed at the moment?
It is anything but a racing certainty.
That is strange in the context of the level of work going on with the ESRI in anticipation of such a tax. Does the Minister think, in the context of the discussions going on, that it will be possible to achieve a derogation for Ireland in relation to this because of our unique dependence on carbon-based fuels and because unlike many of our EC partners we are at a growth stage in demand for energy? In the context of the discussions to date does the Minister believe that our position and that of some other developing countries in the EC will be looked at sympathetically and will the Minister seek that actively?
The proposals are at a very early stage and only represent part of the idea the Commission have put forward for achieving the 2000 target of stabilising the 1990 level of emissions. These proposals in their current form, as the Deputy suggested, would have serious consequences for our economy because we are so heavily dependent on some of the carbon fuels the use of which is to be reduced. We have relied heavily on developing indigenous fuels such as peat, and we rely heavily now on coal to produce electricity. In view of this we are obviously greatly concerned to keep a careful eye on developments in this area. This proposal has a long way to go before it ever becomes a reality, if it ever does.
No. 6, please.
May I ask a final question?
Please, Deputy, I am trying to conserve time so that the Deputy's own questions may not be disadvantaged later.
This is a very important issue for the country, and I am used to letting my questions fall off the other end.
Very well, but other Deputies will insist that their questions are also of great importance.
I accept that. I do not share the Minister's optimism in relation to the likelihood of this not coming to pass. We will have to cope with it in some way or another. The Minister in his reply said that how we would apply the proceeds of the tax would obviously make a great difference as to how any such tax would affect our economy. In the context of thinking in relation to this, can the Minister give any indication of what might be Government policy in this area?
The implications of these proposals are fundamental and will have far-reaching effects on our economy. They will have to be carefully examined here. Our approach is to seek maximum flexibility in the Commission and the Council attitude to the proposals, and to carry out the maximum amount of research into the possible implications of the proposals if implemented. The initial results of, for instance, the ESRI study on the macro economic impact of the proposals, with regard to the domestic sector which were published recently, indicate that the tax proposal will increase energy prices by 15 per cent with an associated reduction in consumption of only 4 per cent. The study also shows that such a tax would bear most heavily on the low income groups in our society and that is also a matter of very great concern.
Relatively speaking the proposal has more far-reaching implications for us than for any other country. I am not optimistic about the outcome. I do not know what the outcome will be, but I foresee certain difficulties with regard to this proposal as there is not ready agreement among the member states to adopt it at an early date. We are anxious to deal with the CO2 emissions and their effect on global climate but any move which the Community might make on its own which would result in serious economic disdvantage for the Community vis-à-vis its trading competitors in the world would have a very serious effect while perhaps not having such a dramatic effect on the overall level of CO2 emissions on a global scale. This is a global problem and all the major countries should come together to find a global solution. If there is to be a global energy tax, so be it, but there are particular problems for us and other member states if it is to be advanced solely as a European contribution to the solution without our trading partners making a similar move in that direction. That is fairly clear.