Carbon Budget: Statements.

Minister for the Environment, Heritage and Local Government (Deputy John Gormley)

It is a privilege to present to the House this, the third annual carbon budget. Since this process commenced two years ago, the carbon budget has continued to evolve and climate change is now very much at the heart of the Government's budgetary policy and decision making.

This carbon budget comes at a crucial time not only for Ireland but for humanity in terms of our efforts to tackle climate change. The next seven days will be a make or break period as the nations of the world gather in Copenhagen in an effort to reach a political deal on climate change, one which we all hope will lead to an early, legally binding international treaty. The science demands action, the economics support it and future generations depend on it.

We must strive to address one of humanity's greatest challenges in limiting and adapting to climate change. Failure to do so could have catastrophic consequences. A global deal on climate change is not only necessary for other countries, it is also vital for Ireland. At home we have seen the loss and suffering scores of families endured during the recent flooding. I have seen this at first hand. While we must not infer too much from once off events, these floods are in line with the scientific predictions of the impacts of climate change in Ireland. The clear lesson from this is that if we do not prepare properly for the climate change impacts that are already occurring and will intensify over the next number of decades, the long-term costs to the Exchequer and society in general will be immense.

To the scores of families who have been inundated with flood waters and the huge physical and emotional toll that comes with this, we have offered urgent assistance in the form of €70 million for flood relief and humanitarian assistance, as provided in budget 2010. We must also learn hard lessons from what has taken place. The questionable nature of some development decisions in the past could not have been more clearly demonstrated. We must stop putting residential developments in flood plains and ensure that a climate change impact assessment is taken into consideration in all planning decision making. This will be done through my new planning Bill.

It is also a time of great economic challenge and in budget 2010 the Government has faced up to the significant challenges we face as a country and outlined our strategy for addressing the fiscal deficit and restoring stability and growth to the economy. The Government took some tough decisions and made some difficult choices but did so in the interests of the entire country, its citizens and their long-term future. The challenges of climate change and of moving to a low carbon society are equal to that of economic recovery. Further, they are intrinsically linked to our future economic well-being. Reducing our emissions will involve difficult choices and difficult decisions, but the benefits of a low carbon, competitive economy and society will greatly outweigh the costs.

We will not achieve this aim overnight but the decisions we make now on emission reductions will have benefits for decades to come. As the action group on green enterprise reported recently, moving to a low carbon society will create upwards of 80,000 jobs during the coming decade. The report advocates the establishment of a green IFSC, international financial services centre, and I met the promoters of this concept last Friday. The Green Party in Government will move on this measure. We will also act to introduce a green procurement system for the public sector, which will drive this sector.

This year we are laying two of the cornerstones of Ireland's efforts on climate change. They will shape and drive the national effort in the years ahead. The first is the carbon levy, announced on Wednesday by the Minister for Finance. Today, I am publishing details of the second cornerstone, a framework for the climate change Bill 2010, which outlines the key provisions to be included in the new legislation.

No tax has been subjected to the level of consideration and economic analysis as the carbon levy. It is finally here even if it is long overdue, as I stated in the House on Wednesday. It is something my colleagues and I in Government have been pushing for many years in this House. As a principle, it is broadly accepted by most economists and analysts as the most cost efficient way to reduce emissions and its introduction is a landmark step in integrating climate change into the annual fiscal budgetary process.

The rationale behind the carbon levy is to change the relative price of fuels based on CO2 emissions to change consumption patterns, encourage fuel efficiency and to lead to an improvement in environment quality. The benefits of such a tax have been outlined in the report of the Commission on Taxation. In my contribution to the budget debate yesterday I emphasised the importance of putting a price on carbon which will raise revenue that can be channelled into making our economy and society more energy efficient. The introduction of the carbon levy is central to our continued efforts to move towards a low-carbon economy. It is part of a gradual and expanding process. In previous budgets we took steps to tailor our vehicle registrations tax and motor tax to provide people with the choice to help the environment and to take greater account of CO2 emissions.

The carbon levy will have an impact on the various domestic fuels used in Ireland. Yesterday, the Minister for Finance provided details of the phasing in of the tax in various fuel categories. The yield from carbon levy for all energy products is expected to be €250 million in 2010 and €330 million in a full year. We will channel this money to make the country more energy efficient and to boost the economy and employment.

We will use €130 million to retrofit homes throughout the country. My colleague, the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, will launch a national retrofit programme in 2010 with a budget of €90 million, of which €36 million will be ring-fenced for retrofitting households in energy poverty. This represents more than double the allocation for the same measures in 2009 and a seven-fold increase on the 2008 allocation. My Department will launch a €40 million retrofit programme for social housing, which I will outline in detail later. This money will have the effect of greatly improving comfort levels, protecting the health of the occupants as well as reducing the carbon footprint of thousands of households throughout the country. It will also create and sustain in excess of 6,000 jobs in the construction sector. As a result of the revenue from the carbon levy the Government has been able to provide a PRSI exemption of €36 million for employers who take unemployed people off the dole. It has also enabled us to reduce our VAT levels.

I refer to the effects on emissions. The carbon levy will reduce emissions in the non-traded sectors of the economy by 750,000 tonnes between now and the end of 2012. This will result in an average reduction of 150,000 tonnes per annum between 2008 and 2012 or 250,000 tonnes in a full year.

The transport sector will be impacted more than any other sector due to the importance of the relative price difference between Ireland and the UK. The Government has published a new transport policy, Smarter Travel — A Sustainable Transport Future. It sets out a clear path to significantly reducing emissions in the transport sector by 2020. Smarter Travel will promote a more sustainable transport system that encourages more active modes of travel, improving local towns and community space, reducing congestion and delivering significant health benefits.

Similarly, the renewed programme for Government emphasises the importance of investment in public transport and by incentivising behavioural change it will deliver a more sustainable transport future for everyone. This emphasis has been seen very clearly in this year's budget. Despite the very difficult financial backdrop, key public transport services are being continued to ensure continued enhancement of rail services, especially to support commuters and to give increased priority to buses in Dublin and other cities. The completion dates and appropriate road standards of the remaining 94 road projects at the design stage or at an earlier level of development will be reviewed in light of the economic circumstances, falling road usage and our climate change objectives.

Changes in other sectors will be more gradual. Investment in more efficient capital stock will be strongly incentivised by carbon taxes. However, these changes will take place over a longer timeframe than one year. It will take time for a carbon levy to have its full impact on behaviour but we now have a very positive starting point.

The second pillar of our ambitious approach to climate change is the proposed over-arching climate change Bill which I will introduce in 2010. I have circulated a document entitled A Framework for the Climate Change Bill 2010, which outlines the key provisions on which the heads of the Bill will be based. I emphasise that work on the heads of the Bill continues apace and I hope to be in a position to publish the heads before the end of the first quarter in 2010.

This legislation marks a key milestone in the battle against climate change and the legislative proposals contained in the document will shape and drive our efforts in tackling this core national priority. These provisions are a mark of our intent and ambition in this area and include enshrining for the first time in national primary legislation key policies and principles which will guide and drive our climate change agenda in the future.

For the first time it will set ambitious statutory targets including a 3% average annual reduction in net greenhouse gas emissions as outlined in the programme for Government, but to be extended to 2020 and an 80% reduction of 1990 levels of greenhouse gas emissions by 2050. Enabling provisions will be included to allow these targets to be amended following the advice of the Joint Committee on Climate Change and Energy Security and in line with the evolution of scientific knowledge and international commitments. The legislation will place the national climate change strategy on a statutory basis, on the basis of a five year cycle with the first two strategies due to run from 2011 to 2015 and 2016 to 2020. It will place the carbon budget process on a statutory basis, based on the multi-annual approach as outlined in the national climate change strategy. It will also place the national climate change adaptation strategy on a statutory basis following its publication next year. It will establish a high level group of experts under a climate change committee which will be supported by a new office of climate change to be located in the EPA and it will develop a system of monitoring and reporting which will impose statutory obligations on Departments and public bodies.

This legislation will be the cornerstone of our efforts to meet ever more demanding national and international obligations post the Kyoto Agreement. Analysis of the latest greenhouse gas emissions data which has now been produced by the Environmental Protection Agency and developments in other relevant areas relating to the carbon budget are set out for Deputies in an appendix to this statement. I have also circulated tables showing the key measures introduced by the Government since 2007 and an updated table setting out the trend in greenhouse gas emissions based on provisional estimates for 2008.

The colder winter of 2008 led to a rise of 8.7% in emissions in the residential sector from 2007. While gross emissions fell slightly, the figures show that the deceleration of emissions due to contraction of the economy may not be moving as quickly as had been anticipated. We must bear in mind that 2008 is the first year of the Kyoto Agreement period and we still expect this deceleration to continue until 2010. Any such trend serves to underpin and underline the need to intensify our response to dealing with our emissions and to achieve the reductions so desperately needed. It also underscores the importance of moving ahead with the two headline initiatives represented by the carbon levy and the climate change Bill.

All social housing will be required to meet more exacting standards of energy performance and it is important to ensure that the tradition of high quality construction standards in public housing continues and that new social housing construction is at the forefront of our efforts to move to the next level of energy efficiency standards. This year, I approved eight Towards Carbon Neutral demonstration projects, which will go beyond even the proposed 2010 standards, delivering a minimum building energy rating, BER, of A2. A total of €20 million is being set aside over the next two years to support projects in this area and I will seek to ensure that the learning derived from those projects will be mainstreamed into the social housing construction programme generally.

The scale of the existing public housing stock, at approximately 145,000 units, and the varying levels of performance within that overall stock, demand that we seek to deliver significant energy efficiency improvements here also. In recent years, we have made considerable strides in this area through the impact of significant remedial works and regeneration programmes.

I propose to expand our involvement in this area and therefore I have earmarked €20 million within the 2009 social housing investment programme to commence work on an energy efficiency retrofitting programme for local authority housing stock, generally seeking to achieve C1 building energy rating. The importance I attach to activities in this area is underlined by the fact that funding for energy efficiency measures in the public housing stock will increase significantly next year, with more than €40 million being provided. In parallel, the Department is developing a ten-year strategy with the objective of achieving the full retrofitting of social housing stock. That strategy is to be completed in the first half of next year and will provide a road map for the delivery of the programme over the next decade.

The retrofitting strategy will also be informed by a comprehensive review of the condition of public housing stock. This national house condition survey is designed to examine, among other issues, the age and condition of the dwelling, its energy rating and the type and extent of central heating, insulation and other efficiency characteristics. The survey is being carried out in a number of phases. Phase one, involving a review of the relevant information currently held by local authorities, is already complete and the planning for subsequent phases is under way with a view to commencing phase two early next year.

I regret that I do not have more time as there are many initiatives I wished to outline. With the carbon levy and the climate change Bill we are setting out our stall in terms of our ambition as a nation to combat climate change. We are sending out a message to people here and beyond our shores of our intent, determination, and sense of purpose in tackling climate change. It is a message I am proud to take to Copenhagen.

Deputy Phil Hogan

I wish to share time with Deputies Coveney and Barrett.

Acting Chairman (Deputy Johnny Brady)

Five minutes each. Is that agreed? Agreed.

Deputy Phil Hogan

I wish the Minister for the Environment, Heritage and Local Government, Deputy Gormley, and the Government delegation of all parties well in Copenhagen. I hope the expectations that have been rather managed, a bit like the budget, will be more successful in Copenhagen than they have been in the budget.

I wish to dwell on one aspect in the time allowed. Fine Gael supports a low carbon society but we believe we should be in a position to make greater strides in our objectives than has been the case to date. The 3% reduction in greenhouse gas emissions that was part of the programme for Government in 2007 is clearly not being met and the target has now been extended to 2020 to cover some of the blushes on those matters. Our party has published a radical document that would help the Minister to achieve those objectives if he could get the Government's support for doing so.

The climate change agenda should be an opportunity for the country. In addition to meeting our greenhouse gas emissions targets, it should provide an economic and employment stimulus. The Fine Gael document, New Era, which the Minister has read, is a clear set of proposals that would assist him to provide jobs and reduce greenhouse gas emissions. I regret that the budget tinkers around the edges of climate change matters. I welcome the retrofit scheme but I do not see any major imprimatur for green technology proposals that have been outlined in our document. A low carbon economy is an opportunity for a competitive economy. Those countries that can make themselves more environmentally sustainable will have the edge over others.

The Government's record on transforming the economy into a low carbon economy has not had its objectives met with any degree of success to date. Recent reductions in emission have only been achieved because of a reduction in our national output. I note that some of the Minister's spokespersons and statements have been indicating that to reduce the national herd would make a major contribution to reducing our agricultural emissions. I do not see any similar impetus being made in terms of implementing Deputy Coveney's proposal on electric vehicles. The Minister did not refer to it in his speech.

Deputy John Gormley

I did not have time. The Minister for Communications, Energy and Natural Resources, Deputy Ryan, has outlined a major initiative in that regard.

Deputy Phil Hogan

We would like to hear more about it. The Fine Gael stimulus plan would make a significant difference in terms of reducing this country's greenhouse gas output. As a response to the environmental and economic challenges we face, we have published a plan to transform the economy into a modern, sustainable and clean one. Our New Era strategy is the first major credible step in transforming the economy into a low carbon one and creating 100,000 jobs. The €11 billion investment programme off-balance sheet will see significant State intervention to rapidly provide more sustainable energy and transport sectors while bringing telecommunications into the 21st century. That radical transformation will dramatically reduce emissions from the energy and transport sectors.

Appendix 2 of the carbon budget statement makes clear that the Minister has ignored some of the proposals suggested to him on the matter. We import €6 billion worth of fossil fuels every year to feed our cars, homes and electricity grid. That is neither economically nor environmentally sustainable. The €6 billion of imported fossil fuel also represents 64.7% of all emissions in this country created from fossil fuel combustion. Some radical suggestions have been put forward by this party to assist him in meeting our national objectives. The Minister is setting up committees and he is one step away from making major decisions, yet he is tinkering around the edges of achieving our national objectives to reduce greenhouse gas emissions. Actions speak louder than words. The all-party committee chaired by my colleague, Deputy Barrett, has many suggestions to make to the Minister to assist him in meeting those objectives much more quickly than he has to date.

Deputy Simon Coveney

I welcome the opportunity to speak on this issue. Even in the heat of the budget debate it makes sense to have set time aside to talk about the carbon budget, which is a welcome new element to the budget debate.

The debate we had on Thursday evening on the introduction of a carbon tax or carbon levy was an embarrassment to this House. It turned into a Punch and Judy show and a slagging match, which I was embarrassed about. It is unfortunate that when we are introducing something as significant as a new carbon levy, a carbon tax for the first time, we had such a debate.

It is also unfortunate that when my party has genuine concerns about the way in which this new tax is being implemented that those concerns were dismissed on the supposed understanding that Fine Gael wants to play politics with the issue or does not understand it. I found that very frustrating also.

We have published our views on climate change. As I indicated on Wednesday night, we proposed a higher carbon value, but we had also proposed that there would be certain exemptions for good reason considering the current state of the economy. We now have a really unacceptable dichotomy, whereby we will charge consumers a carbon charge for using fossil fuels, for good reason. We are continuing not only to allow energy generators to use carbon-based fuels with no charge to them, but on top of that we are requiring them to charge consumers for something that is costing them nothing and attaching a carbon element to electricity charges. That is the major objection I have to our carbon charging strategy.

Consumers are paying on the double and large energy generating companies are making windfall profits on the back of that to the tune of €220 million last year with the exception of the ESB, which gave some money back in a different way. That must change. We have a pool of money here. If there were a tax on windfall profits made on the back of consumers, we could use it as a carbon fund to do all sorts of other things on top of what the Minister proposes. The Minister seems to refuse to consider that and dismisses the issue as if it is not a valid one. I cannot understand that, given he is someone who has a genuine concern in regard to carbon management.

I refer to forestry. The one thing on which anyone who is concerned about carbon management, carbon reduction and creating carbon sinks must agree is that we must take a more aggressive and proactive approach to planting trees, or afforestation. This issue was painted in the budget in a way that suggested the Government will allocate an extra €121 million for afforestation next year. This year we spent €119 million. The Government said that next year, we will plant 7,000 hectares when we have not even hit 5,000 this year. I do not see how the sums add up.

Planting trees not only makes sense for the environment but it is also very labour intensive. I appeal to the Minister to try to increase the priority of forestry. In the national climate change strategy, to which we are supposed to be operating, there is an aspiration that 15,000 hectares of trees will be planted annually. The programme for Government states 10,000 hectares. Next year we aspire to planting 7,000 hectares but the sums do not add up.

I appeal to the Minister to consider the two issues I raise, in particular the windfall profits tax. Consumers are getting hit on the double. A pool of money which we could use as a carbon fund is being pocketed by energy generators on a windfall profits basis. That is no longer acceptable, in particular in the context of introducing a new carbon charge for fossil fuels.

Deputy Seán Barrett

My understanding, and that of the public, was that all moneys collected from the carbon levy would be used for the purpose of reducing CO2 emissions. The Minister only mentions €130 million to retrofit homes. I got the impression from the Minister’s Budget Statement that this fund has already been raided by the Department of Finance. He stated clearly that some of the money will be used for purposes other than for what this carbon levy is supposed to be for. If we are to sell this principle to the public, I would like an assurance that this levy and the moneys from it will be ring-fenced and that a clear statement will be made each year on how much and exactly where it was spent and that at the end of the year, when presenting the carbon budget for the following year, the Minister will report how exactly the money was spent in the previous year.

The Department of Finance should not be allowed to touch this money if it is called a carbon levy. My committee and I will support any effort the Minister requires to ensure this does not happen. I strongly suggest that there be a provision in his climate change Bill stating that all moneys raised from a carbon levy will be used for that purpose and, therefore, it will have a statutory basis. Let us get off on the right foot.

Our committee has endeavoured to approach this topic on an all-party basis, which has worked to date. I hope that will continue. I am pleased the Minister is proceeding with the climate change Bill. As he knows, we produced the heads of a Bill. I hope the heads of his Bill will be debated at our committee and that together, we may be able to produce something which will achieve all-party support.

Another matter about which I am concerned is all this smart this and smart that, including smart transport. The reality is the Department of Transport has done absolutely nothing to show any progress on the way public transport is provided. We do not have one bus or one local authority vehicle displaying a sign stating that it is run by renewable energy. We have an infrastructural deficit in terms of our public transport.

In regard to the capital programme, will somebody realise the potential of upgrading our grid as a matter of urgency? We should stop fooling around trying to decide what to do on this issue. As the Minister well knows, building a grid is vital infrastructure to enable us to transform the means by which public transport and everything else could be run.

I refer to the interconnection to the super grid that will be developed in Europe and through which Ireland could avail of an export market. If we do not prepare the ground now, we will not be in a position to gain access to the grid for those who want to invest in renewable energy, whether ocean energy, onshore wind energy or otherwise. This is a real problem for investors.

I urge the Government to plough the money into the infrastructure that is necessary for what would be a major export business for Irish green energy in the future. Let us put aside the nice ideas we have about undergrounds and so on and get on with providing a grid that will enable people to access it in order that we can really transform the manner in which we produce our electricity.

As Deputy Hogan stated, we import fossil fuels at tremendous cost to this State. Oil prices will increase. We are aware we have peak oil. The minute oil prices increase, it will be detrimental to this country. The sooner we develop our own source of energy, the better. One cannot do that without the infrastructure. We found that with rail, road, etc. I appeal to the Government to realise the potential there and to invest the money.

Deputy Liz McManus

She did not. The Minister should be honest.

Deputy Joanna Tuffy

I never opposed the measure. I just pointed out that it would not be possible for the Minister to implement it and I was right. The Minister had to wait for action from Europe and 100-watt bulbs have only been phased out this year. It will take years to complete the measure. There was never a big figure amounting to hundreds of tonnes saved because of the banning of incandescent light bulbs. The headline from the first carbon budget never happened. Last year it was 2020 transport, which was very much a damp squib. The year 2020 is still a good few years away, although the Minister mentioned it again this year.

This year the headline is the carbon tax, the climate change Bill and the retrofit schemes. With the retrofit scheme, the big problem for the Government is that it usually makes a big announcement of so many millions of euro being provided with so many jobs arising from it. The newspapers write their headline from that but a year later, what will be delivered? There has been considerable underspend in the greener homes and home energy schemes this year.

I cannot presume what will happen by the end of the month but in answer to a question I tabled a week or two ago, I was told the underspend in the greener homes scheme was approximately €5 million. The underspend looks to be much greater for the home energy scheme, as €47 million was provided but only €13 million was spent at the time of my question. I could be wrong but I presume this relates to the recession. Although a grant is provided for a third of the cost of retrofitting a home to make it energy-efficient, people cannot afford to spend what is required because of the recession. The money provided for Government grants this year has apparently not been spent as a result. Will there be a similar problem with the retrofitting scheme announced by the Government this year?

Some of this goes to local authorities but they may not have the capacity to benefit because they are significantly understaffed. Authorities have lost 4,000 staff over the past year, mainly temporary staff, and in the budget this year the local government fund has been cut further. That means more staff will have to be shed by local authorities. How will such authorities carry out retrofitting or flood relief works if staff numbers are down?

The Minister mentioned flooding. Estimates for flood relief works last year provided €50 million and the 2008 budget provided €50 million. Some €25 million was spent in 2008 and this year €38 million will be spent. The pattern has persisted for about ten years where so much flood relief is provided in the budget but not all of it is spent. A considerable amount has not been spent in the past couple of years. The Government has stated it will provide €70 million this year but at the end of next year will we find that only half of that has been spent?

When the flood policy review group and Goodbody economic consultants considered the matter they found that flood relief money was not being spent because there is not enough staffing to ensure it is spent. The Government is cutting back on such staff.

The Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, should be picked up on the idea that we should not tax work or labour and that we should instead bring in carbon taxes. Such taxes are fine in principle but the fairest way to tax people is on their income. We do not want to go the route of the Progressive Democrat policy over the past 12 years and reduce income taxes further in the next few years. We must learn from the mistakes we have made. The Government made a mistake when it reduced income taxes and it brought about more inequality as a result, as identified by ICTU. Societies and countries which have more equality in income and fairer income tax systems have a better record on climate change.

If the Minister really wants to do something about climate change, he should bring about more income equality in Ireland. This budget is doing the reverse, and it is similar to what the Government has been doing for the past 12 years when the Progressive Democrats controlled matters. It seems the Green Party will allow this to happen and positively promote such action as the Minister, Deputy Eamon Ryan, has done lately.

The Green Party used to deal with environmental matters but over the past few years the issue has been climate change. People are now focused on jobs and the economy so the issue has become subdued. If we want to act on climate change we must protect the environment. The Minister, in the Budget Statement, has let his Government cut through the environment budget. That budget covers the Environment Protection Agency etc. and 25% less will be spent under the environment heading. Some 67% less is to be spent on waste management, which is very important in the reduction of emissions. We must ensure people do not send rubbish to landfill or incinerate it. The local government fund has been cut by 12%. The grants for heritage and planning are being reduced in a similar way.

There are headlines about climate change and announcements by Ministers in press conferences. If the Green Party is to do its job in government, it should look to protect our environment. That is where it is falling down, which is not helping with the climate change agenda.

Deputy Liz McManus

I thank Deputy Tuffy for affording me some time. It is welcome that we are having this debate and it is good that the carbon budget has been introduced to this House. It smacks of tokenism when one Minister is present in the House when the big task facing this Government and those following it will be tackling climate change. Departments that have a direct responsibility are not being represented. The Ministers for Transport; Agriculture, Fisheries and Food; and Enterprise, Trade and Employment are not here. The Taoiseach should be here as well.

Unless we have a significant shift in the Government on the issue we will not reach our targets. We will have debates, point out matters and have agreements and disagreements but it will not happen. The Greens used to use the term "transformational approach" and that is what we need. This is not it.

I welcome the publication of the Bill's framework and there are some good parts to it. I welcome that there will be a climate change committee which will draw on expertise and that fuel poverty has been mentioned, as it is central to how we approach the issue. The problem lies in the political sphere; this is about leadership and management. I cannot find within the framework document any indication that the lesson has been learned.

Responsibility will still lie with the Minister for the Environment, Heritage and Local Government but he or she is just one Minister. The big problem is that the Minister will not have authority over other Departments. The structure that all the parties on the joint Oireachtas committee support is the idea of a transformational piece of legislation where the Taoiseach will take charge and manage the project in a coherent way.

I hope it is not the case but there seems to be a real danger that the Minister feels this is his area and he must hold on to it no matter what. That is not the way of the world anymore. I will never take from the Green Party its role as a pioneer in this area but this country will not play its part internationally unless we transform the way we govern ourselves regarding climate change. This is not set out in the framework Bill and that must be addressed. I would love it to be otherwise, but it will not happen.

No Member, including the Minister, has had enough time to make his or her contribution, even though this is a central political issue, and this also needs to be addressed. The figures in the appendix to the carbon budget are valuable. Carbon emissions were expected to reduce because of the recession but that has not happened to the extent anticipated, which is a pity because we have to deal with the issue. However, the central issue is how we transform our society across the board to ensure we have a low carbon economy whether Ireland is experiencing growth or a recession. I have great concerns, having only given the document a cursory glance, about the revised projection for gross emissions between 2008 and 2012 because it is way in excess of our emissions in 1990. This reflects myopia, a lack of confidence and a failure to grasp the core issue if we are to make the transformation we need.

The problem does not lie with Fianna Fáil. There is a readiness, which may not come naturally, that was not present previously in the larger party, to grasp the nettle but the Green Party is not pushing. The Green Party used to push all of us, which was great, but it has given up pushing and has settled for second best. I wish I did not have to say this because we must work together to meet this challenge but the proposed Bill is more of the same. I welcome wholeheartedly the few changes it provides for but in terms of political management and administration and turning the tanker around, whether it is in the difficult sectors such as transport, agriculture, enterprise and even education, a different structure and new form of governance are needed which we have not had previously. However, we have partially applied different structures to meet major challenges such as that in Northern Ireland in the past. I urge the Minister to have courage regarding what must be done because he will have support from every party if he demonstrates the necessary courage to bring about that transformation.

Deputy Martin Ferris

The context of this debate is the Copenhagen summit which is taking place this week. Climate change and, more fundamentally, adverse weather conditions, are among the issues of immediate concern in Ireland in the light of the impact of the recent floods and concerns we are witnessing different and unusual patterns of rainfall that reflect global changes. Different agendas will be pushed in Copenhagen — some for selfish national reasons — but, hopefully, the hopes of ordinary people will prevail. That is why it is vital that the summit reaches a legally binding deal, which is strong enough to tackle the challenge of climate change while being just and fair to developing countries.

Different interests are at stake. For developed countries, which by and large no longer depend greatly on manufacturing industry, many of targets revolve around reducing emissions from heavy industry. For many developing countries, including some that have experienced significant industrial growth over recent decades, this is regarded as presenting a threat to their future development. Striking a balance between the two, which has the best interests of the world's population at its centre, will not be easy, but it must be done. There is also the onus on the developed Western countries to set and implement binding effective targets for emission reductions, to develop new cleaner technologies in order that developing countries are not left to carry the main burden for the negative impact earlier Western and northern hemisphere industrialisation and use of carbon fuels has had.

The problem of climate change must also be approached in a positive manner in order that moving away from older manufacturing systems based on the heavy use of carbon fuels is not seen as an inhibitor to economic growth but as an opportunity to boost the use of newer and cleaner technologies, which do not present the same threat to the environment and which are more sustainable both in terms of the environment and future economic growth. The key to this will be the greater utilisation of renewable energy, which will not only have radical implications for the industrial economy but also for agriculture, with the potential for the greatly increased production of energy crops, and for an entirely new economic sector based on the production of energy from the wind and sea. The potential for Ireland, as an island nation, is a huge benefit that must not be lost.

The Government claims that by introducing a carbon tax it will be on board with the thinking outlined internationally. If carbon tax is to work effectively, it should be revenue neutral whereas the measure introduced in the budget is another means to increase revenue and, in common with most of the other measures implemented, it falls disproportionately on people who are feeling the impact of the current austerity programme. It has been argued by experts in the field that an effective carbon tax, which would reduce the use of carbon fuels, would also reduce revenue from that source as logically as if it was a success, the use of carbon fuels in the transport sector would fall.

The Green Party may claim its introduction fulfils part of its commitment to having the Government implement measures to protect the environment and to attain the ambitious targets set for the reduction in CO2 emissions but there is little in it that will tackle the underlying causes. Instead, it will impose an added burden of taxation and will in no way help to change patterns of transport and overall fuel use. For example, nothing in the manner in which it will be implemented will encourage people to use public transport rather than their own cars. That has been pointed out by representatives of the bus sector who have made the valid point that if the Government was serious about encouraging a significant shift to the use of the bus sector, it would not have imposed this tax on buses.

The other issue is that the tax will increase the level of fuel poverty. Imposing the tax on users of home heating oil, coal and peat will mean an added cost to household budgets, which will mean that more people will be unable to keep their homes adequately heated. This, in turn, will lead to health problems which will lead to an increased burden on the health services.

The Minister for Finance claimed that the increase in fuel poverty will be offset by a voucher system that will facilitate the application of an allowance and also that more will be invested in the effort to make homes more energy efficient and, therefore, reduce the cost of heating homes. Surely that programme ought to have been made a greater priority before this and measures put into place to ensure all houses built over the past period were compliant rather than throwing it in now as an afterthought due to the fact that the Minister knows that applying the carbon tax to home heating oil will increase fuel poverty, as he has recognised.

He also claimed that revenue from the carbon tax will be partly used to support rural transport, which is disingenuous, given rural transport is under severe constraints from cutbacks to services. The moves afoot to significantly reduce the availability of buses in rural areas will offset any likely shift away from private car use if for no other reason than that even if people did wish to do, the service either will be no longer available or has been significantly reduced.

That is not to say there is not a serious issue to be addressed here. The level of emissions needs to be reduced. Under the Kyoto Protocol, this State has committed not to allow CO2 emissions rise more than 13% above their 1990 level. Currently it is 23% above the agreed target. Not merely does this leave us in breach of our international obligations, it renders us liable to annual fines of up to €180 million. This accelerates the necessity for us to live up to our obligations.

Kyoto marked only the first step in tackling global warming. Experts estimate that carbon dioxide emissions must be reduced by between 80% and 90% by 2050 if run-away climate change is to be avoided. We have not merely a moral obligation to future generations to prevent global warming; it makes economic sense. The Stern review found clear evidence that it is cheaper to take the necessary measures to prevent climate change now than to deal with the consequences later.

Climate change is not the only reason, however, to reduce our dependence on fossil fuels. World oil supplies are getting harder to access and are concentrated in a reduced number of geopolitically unstable nations. There is still lots of oil in the ground, but it is getting tougher to find and more expensive to extract. Meanwhile the growth of the Asian economies continues to increase global demand for energy. Estimates of the date of peak oil — the point at which global supplies will top out before entering decline — range from now until 2020 or later. However, there is a growing consensus that we are entering an era of permanently higher energy prices. As a country that imports 90% of its energy, situated at the very end of extended supply lines from the Middle East and Eastern Europe, Ireland is uniquely vulnerable. This is all the more reason we should now invest in clean, sustainable energy.

Dealing with the twin challenges of climate change and peak oil requires us to begin reducing our fossil fuel usage and developing alternative sources of energy. This can be achieved by putting a price on carbon emissions, which will drive up the price of fossil fuels to reflect their environmental costs while making renewable energy more competitive. However, this again is something that would discriminate against the most vulnerable in society.

An alternative to a carbon tax such as this might be a personal carbon trading system, whereby the Government would set a national carbon budget, limiting the amount of carbon which could be emitted in a given year, and use it as a basis to allocate emissions credits to individuals. Every adult would be entitled to the same number of emission credits, which would be held in electronic accounts and used to make carbon-related purchases such as electricity, heating fuel and petrol. People who wanted an extra carbon allowance would be able to engage in emissions trading and purchase additional credits. Conversely, people who did not use all their credits could sell their surplus. The balance of supply and demand would set the price. Unlike a carbon tax, personal carbon trading would set a definite limit to the amount of carbon released by the economy in a given year. Giving everyone an equal number of carbon credits would ensure equity and effectively address the issue of fuel poverty. Personal carbon trading would be a progressive measure and since the rich use more energy, they would need to buy allowances from the less well off. In this respect, personal carbon trading is superior to a carbon tax. However, it would be complex to implement and involve high administration costs.

Perhaps the best option would be a cap and share scheme, such as that proposed by the Foundation for the Economics of Sustainability, Feasta, and supported by Comhar, the Sustainable Development Council of Ireland. Under cap and share, carbon emissions would be capped at their current level and then reduced rapidly year by year. Each of us would receive an annual fossil fuel pollution authorisation permit, PAP, conveying the right to our individual share of that year's total emissions and making us responsible for it. The important thing about these permits is that unlike personal carbon trading, they would not restrain our personal energy use. Instead, they would permit fossil fuel production. PAPs would be valid for a year, during which people could sell them to financial intermediaries such as banks and post offices, which in turn would sell them on to oil, coal and gas importers or producers. These producers would need to acquire enough permits to cover the carbon dioxide emissions from every tonne of fossil fuel they sold.

Cap and share has a number of advantages. Unlike a carbon tax, the fact there is a cap on emissions means a reduction in the amount of carbon entering the atmosphere is guaranteed.

An Ceann Comhairle

We are under a time constraint and I am obliged to call the Minister to conclude the debate.

Deputy Martin Ferris

It is also fairer than any other system because the right to emissions is shared equally among the population. Although the cost of energy and other goods would rise, due to fossil fuel producers having to pay for permits, this would be offset by the money individuals would earn from the sale of their PAPs. For most people, this would be greater than the increased cost of the energy they used. Cap and share would operate as a tax or rent on fossil fuel importers and producers, but unlike other environmental taxes, its final impact would be progressive. Due to the fact cap and share does not regulate individual purchases of carbon by consumers, it is a lot simpler and cheaper to implement than personal carbon trading.

Minister for the Environment, Heritage and Local Government (Deputy John Gormley)

It pushes the boat out on climate change. I am proud of the Green Party's record on this. We will continue to push for the very highest standards. An 80% reduction by 2050 is what the scientists are telling us is required.

Deputy Liz McManus

This will no do it.

Deputy John Gormley

It will be tough, but it is absolutely necessary. The Green Party was the party that set up the Joint Oireachtas Committee on Climate Change. I hope we can continue along this path and that we will get there. Let us all hope for a good result in Copenhagen.

Dáil Éireann debate - Friday, 11 Dec 2009

Carbon Budget: Statements.

Dáil Éireann debate -
Friday, 11 Dec 2009