I propose to take Questions Nos. 2 and 3 together.
I am aware the European Commission has confirmed that EU member states can consider imposing temporary tax measures on windfall profits of energy providers and use the revenue generated to provide consumers with relief from high prices. Officials in the Department and in the Department of the Environment, Climate and Communications are evaluating the potential for such a proposal. The Deputy will appreciate that significant work would have to be undertaken as part of any such evaluation.
With regard to tax generally, the trading profits of companies in Ireland are typically taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current regime are its simplicity and that it applies to a broad base. Changing this rate or imposing additional levies on certain sectors could have unforeseen consequences. There is a risk of such taxes leading to higher consumer costs and negative impacts on investment in the energy sector, in particular in the area of renewables. These are the factors that must be taken into account in terms of whether it will affect investment.
The Government has taken a number of measures to reduce the burden on consumers in relation to the cost of energy. This includes providing €200 worth of energy credit to every household in the country, reductions in fuel excise duty, and a reduction in the VAT rate for electricity and gas.
In relation to energy policy, which is the remit of my colleague, the Minister for the Environment, Climate and Communications, Deputy Ryan, a well-functioning EU electricity market remains crucial for the integration of the internal energy market at EU level and for providing investment signals for the integration of new renewables, which are essential ultimately to break our dependence on fossil fuels. The best long-term approach for Ireland to insulate consumers from volatility on international wholesale energy markets is to invest in energy efficiency and renewable energy. Cutting our dependence on fossil fuels and generating power from our own renewable sources will ensure a cleaner, cheaper energy future in the long term. Electricity and gas retail markets in Ireland operate within a European regulatory regime wherein electricity and gas markets are commercial, liberalised, and competitive. Responsibility for the regulation of the electricity and gas markets is solely a matter for the Commission for Regulation of Utilities, CRU, which is independent of the Minister.
The renewable electricity support scheme, RESS, is Ireland's flagship policy to deliver on the Government's target of up to 80% renewable electricity by the end of the decade. Electricity technologies now compete through regular auctions under the RESS, as well as through other routes to market such as corporate power purchase agreements. The RESS contains strong consumer protection measures, with wholesale market revenues above the auction price returned to electricity consumers through the public service obligation levy. Renewable energy sources, such as wind and solar generation, reduce electricity consumer costs by lowering wholesale electricity prices during periods when they are generating power, highlighting the need to accelerate energy system decarbonisation to reduce reliance on fossil fuels.
The war in Ukraine has dramatically concentrated EU efforts to address European dependence on Russian oil and gas through proposed new measures to diversify fossil fuel imports, enhance security of supply, and accelerate energy system decarbonisation, as set out in the recent REPowerEU communication. The European Commission is working closely with member states to protect the resilience of Europe's gas security of supply through solidarity measures. Both the International Energy Agency and the EU have stressed that the current situation further strengthens collective resolve to accelerate the clean energy transition, in line with the European Green Deal.