Joseph Doyle
Question:9 Mr. Doyle asked the Minister for Energy his views on whether revenue from carbon taxes should be, in the first place, allocated to anti-pollution and energy conservation measures.
Ceisteanna—Questions. Oral Answers. - Energy Taxes.
Patrick D. Harte
Question:17 Mr. Harte asked the Minister for Energy if he has raised with his EC colleagues the possibility of derogation from the full impact of proposed carbon taxes; and if he will make a statement on their attitude to Ireland's position as a developing economy nearly dependent on carbon-based fuels.
Monica Barnes
Question:18 Mrs. Barnes asked the Minister for Energy if he will outline the levels of CO 2 emission reductions which can be achieved by the energy sectors; and the actions proposed to meet these EC targets of emission control.
Michael Creed
Question:23 Mr. Creed asked the Minister for Energy if he will give details of the progress to date of discussions at EC level in relation to carbon and other energy taxes.
Jim Higgins
Question:52 Mr. J. Higgins asked the Minister for Energy if he will outline the plans being made by his Department for the impact of the proposed EC carbon taxes; and the work done to date on this issue.
I propose to take Questions Nos. 9, 17, 18, 23 and 52 together.
The EC is committed to stabilising CO 2 emissions in the Community as a whole at 1990 levels by the year 2,000. This commitment was made at the joint Energy and Environment Council in Luxembourg in 1990 and reaffirmed in December 1991. In so far as member states such as Ireland, Portugal, Spain and Greece are concerned, this joint commitment provides for differential treatment, in accordance with the concept of equitable burden sharing, having regard to the economic and social development of those countries.
The obvious measures to achieve this commitment include inter alia, (i) increased afforestation, (ii) switching to lower carbon fuels, e.g. gas and renewables (iii) increased energy conservation together with improved efficiency and (iv) the application of new technology for appliances, equipment and industrial processing.
One of the specific measures suggested by the Commission in response to the joint Council's decisions is to encourage energy efficiency and conservation through the introduction of a carbon tax. The joint Council have acknowledged that such an instrument is likely to be needed and have asked the Commission to carry out further studies. The matter will be considered further when the studies are completed, probably later this year.
The implications of an energy/carbon tax are being considered by the Departments of Energy, Finance and the Environment. An ESRI study on the macro-economic impact of such a tax is nearing completion. While this work is already under way it is important to understand that the Commission is still examining the structure and application of such a tax. These considerations, together with the Commission studies, will be material to developing a policy response for Ireland's contribution to achieving the objective of Community stabilisation.
Given that the question of a tax awaits the outcome of those studies the question of a derogation for Ireland does not arise at this time. The question of allocation of possible revenues from such a tax is a matter for the Minister for Finance.
In line with the decision of the joint Council of December last, a national programme including a comprehensive approach on strategies and targets for limiting CO 2 emissions is being prepared at present by the Department of the Environment in consultation with other Departments, including Energy. When completed the programme will be transmitted to the Commission.
In this context I am in agreement with the general view that energy conservation is the best method in the short term of reducing CO 2 emissions. Ireland has an ongoing energy conservation programme and possibilities for expanding that programme are kept under review. Measures being worked out at present under the Community SAVE programme to support energy conservation initiatives by member states will form part of our future conservation activities.
In our view also the development of forestry in Ireland will play a role in limiting our CO 2 emissions. Forests absorb and retain large amounts of CO 2. Our rapidly increasing forest area could absorb as much as one-third of our expected growth in emissions. Inclusion of sink capacity in calculating emissions of CO 2 is a vital element of our national programme.
I thank the Minister for the information to a range of questions from the Fine Gael Party. Would he outline what differential treatment has been agreed for Ireland, Spain and Portugal in the context of the requirement to curb CO 2 emissions?
What I said was that the agreement provides for differential treatment; I did not say that any specific preferential treatment had been decided upon as yet. It will be possible for us to seek preferential treatment in relation to any final agreements made on these matters.
Is the Minister still of the view that CO 2 taxes are unlikely to be a reality for us? Does he accept the view held generally in Europe that the first of these taxes will be introduced in the 1993 budget, increasing thereafter until the year 2000? If so, would he agree that a tiny proportion of these taxes, if utilised in the areas specified in Deputy Doyle's question — anti-pollution and particular energy conservation — could make a huge contribution to those programmes in this country?
As the Deputy will appreciate, the adoption of the carbon tax proposal would have very wide implications for the economies and for the industrial and commercial prosperity of member countries. Progress on this issue at European level is being made only following very thorough studies of the implications of such a tax. The environment conference scheduled for Rio this summer was expected at one stage to move in this direction but, short of offering a personal opinion, that looks less likely now than it did some time ago. Decisions in this regard are under consideration and I cannot forecast what the final outcome will be. Taking into account the views expressed by other member countries at environment and energy joint Council meetings, there are major obstacles to be overcome and I would not care to make a forecast.
Is the Minister aware that an unofficial ERSI report of last autumn conducted by Messrs. Fitzgerald and McCoy, states that an energy or carbon tax would be of great economic benefit to this country, especially if it were introduced unilaterally and if the proceeds were used to reduce taxes on labour? Would the Minister comment on that?
The only ESRI report I am familiar with has been published relates to preliminary results for the domestic sector which indicated that the tax proposal would increase energy prices by 15 per cent, with an associated reduction in consumption of 4 per cent. The study found that the tax would bear most heavily on lower income groups, that is, those most dependent on solid fuel. Full results of studies on all sectors will be completed in late 1992.
If we receive the preferential treatment concerning emissions to which he referred, does that mean we can continue polluting more freely than other countries might do? If carbon tax was introduced would the Minister support the idea for the capitalisation of public transport, thereby encouraging motorists to reduce pollution?
The type of preferential treatment Ireland would be interested in achieving would include provisions to enable us to continue to use peat in energy industry. Matters of that kind in which we have a national interest would be taken into account.
Given that the Minister is rather coy about making an analysis of what is likely to happen at European level, could he tell us what case he and the Government are making at that level in relation to these issues? Does he support the implementation of a carbon tax, and, if so, is he indicating ways in which it would be used? What is the input of the Minister and the Minister for the Environment in these discussions?
In the discussions Ireland has indicated its agreement in principle to such a proposal and we have indicated areas which must be carefully examined and taken into account before any final decisions are made. We are adopting a positive attitude in the discussions.