The first item on the agenda is the proposal for a carbon energy tax in Ireland. The Minister for Finance has commenced the consultation process in that regard and has suggested the introduction of such a tax. A copy of the proposal has been forwarded to members. The views of members on how we can deal with this matter are being sought so that the committee can formulate a reply. I would like to hear from members who have any proposals in that regard.
Carbon Energy Tax: Presentation.
May I take it that the committee will seek some expertise on this matter, which has been the subject of a huge amount of research by the Intergovernmental Panel on Climate Change? We need to assess many examples of the choices made in other countries that arrived at this crossroads long before Ireland decided it was appropriate to consider this matter. This country can look to other countries to help it with the fundamental choices it faces in this regard. The document before the committee suggests that revenue recycling should be considered. This means, in effect that any revenue derived from a carbon tax will be ring-fenced for specific uses, for example to provide grant-aid for energy efficiencies or to assist with energy-saving technologies such as renewable energy. Another approach is that of some Scandinavian countries where money goes to the general Exchequer. While revenue recycling is the favoured approach in this document, the committee should evaluate options on their merits. I wonder whether it is for us to put together a document or whether we should have the benefit of contributions from other international, independent experts.
Submissions have to be made by 30 September, which does not give us very much time. It is a matter of us deciding how we should deal with the issue in the short time available. A number of other Oireachtas committees have also been contacted by the Department of Finance in this regard. Presumably, we will inform other committees of any action we decide to take to avoid duplication.
It was not clear to me that the intention today was to deal with this paper in substance. Perhaps I misunderstood in thinking we were to discuss today the way in which we would address the matter rather than get into the meat of it.
Obviously, the Finance committee is considering this matter as, I presume, is the Joint Committee on Social and Family Affairs. People talk neutrally about carbon tax but we are talking here about dearer electricity, dearer petrol, dearer fuel and dearer transport. We must face up to that. It would be useful if there were a joint meeting of the committees considering this issue.
Five other committees were notified of this issue, including the Committees on Transport, Agriculture and Food, Finance, Social and Family Affairs and Enterprise and Small Business, but we are not sure what plans, if any, they have to deal with it.
Every committee will approach the matter from its own angle. The expectation is probably that the environment committee will address the matter in terms of emissions, an issue which is unclear from the paper that has been circulated. It is not clear whether the new tax is being proposed to gather extra revenue or to cause people to divert from the use of carbon fuels. It is a bit fragmented. This is a substantial question for the country. It is substantial in environmental terms as we are way through the stratosphere in terms of carbon emissions and the degree to which we have overshot the Kyoto targets. The Government has been skirting around this important proposal for a number of years and it has only been put on the agenda as the gun has been put to its head at EU level. It is not an adequate consultation process to have each committee examine the matter separately before submitting recommendations.
If this issue is of such importance that five committees have been consulted, then those committees should meet in joint session to consider it. Let us have the argument out from the environment committee perspective in terms of emissions, from the revenue raising perspective of the finance committee and from the perspective of the impact on low income families. It is clear from this paper that low income families will be disproportionately affected, but the remedies being proposed to confine any remedial measures to medical card holders and recipients of family income supplement are not good enough. All of those aspects need to be addressed and I propose that we contact the other committees considering the matter to request a joint meeting. If need be, let us use the Dáil Chamber to discuss this proposal. We have until the end of the month to consider it while no plenary session of the Dáil will take place until 28 September. There should be a joint meeting of the committees concerned to debate the issue.
As Deputy Gilmore said, five committees are considering this important document. It is very important that we listen to the views of industry, farming and environmental groups as our competitiveness internationally will suffer. Many of the companies here use large amounts of energy. A tax is being introduced by the back door and I have heard it stated that €200 million per annum will be raised. While the measure is in place in other European countries, it has not been the success it was thought it would. It is not achieving the goal of reducing atmospheric pollution.
It is important that we look at the quality and age of the various vehicles on our roads. There are many ageing vehicles in poor condition as people will know having travelled behind them and seen the visible effects they are having on the environment. We should be considering removing tax on cars that run on gas. The tax on vehicles of all kind here is far in excess of that imposed in other EU member states.
This new tax will have a huge effect on our international competitiveness and could put jobs at risk. As Deputy Gilmore said, it will increase industry, farming and transport costs and our electricity charges will rise since much of our power is generated by fuels of various kinds. We cannot allow Irish jobs to be lost or industry to be damaged as a result of the introduction of this new tax.
It is important that we hold some form of joint committee session as it would be unfair if we were to discuss the matter purely from an environmental perspective. While we should be proposing stringent measures to ensure that we comply with the Kyoto protocols and reduce emissions of carbon, there is a bigger picture to consider. One need only look at the report before us. As the poorest households tend to spend a higher percentage of income on fuel and tend to use more carbon intensive fuels, the greater impact would be on those in the lower income bracket. We need to be conscious of the decisions we are making in terms of the broader picture.
What impact would a carbon tax have on our competitiveness and employment, particularly in view of tightening international constraints? If a carbon energy tax is to be introduced, we should at least hear the views of other committees and consider other angles before we complete our deliberations. Obviously, if the committee makes a decision based purely on environmental considerations, it will support some form of energy tax to discourage the use of carbon and fossil fuels. On this occasion, we need to look outside the ambit of the committee to explore, develop and take into account the opinions of other committees and groups which may hold views contrary to what the committee would recommend if it were to be solely insular in its vision.
I suggest that in the event that we cannot have joint sittings, we invite before us bodies which have made submissions to other committees opposing a carbon tax or highlighting concerns about the potential effect of such a tax on household income, transport costs or our competitiveness within the international economy.
While I accept the Deputy's comments on the effect of a carbon tax, the committee's remit is confined to environmental issues. Five other committees have been notified of the Government's intention. If any or all of them wish to respond, they must make a submission by 30 September. If we were to decide to hold joint sessions with other committees, we would have to contact the committees in question to ascertain if they would be happy to do this. I assume the committees would have considerable difficulty reaching agreement on a submission which must be made in less than three weeks.
The various committees would still make individual submissions. We should avail of the expertise provided by those invited by the various committees to address the issue of a carbon tax in the coming weeks.
I will facilitate the wish of the majority of members.
I do not disagree with Deputy Kelleher. As a committee with responsibility for the environment, it is important we examine the submissions made by other committees, each of which will, I presume, meet and make a submission based on its angle on the proposed tax. As an environment committee, we have predominant responsibility on this issue. Rather than holding joint meetings, it would be wiser if we discussed those issues relevant to this committee, make a submission based on our discussions and then consider other submissions made by other committees. We deal with particular issues, while other committees take different angles. Although I understand the need to examine these angles, they should not exert the dominant influence on our views. We would be better to discuss the matter and then formulate and make a submission, after which we can, if desired, examine the submissions made by other committees.
We must approach this issue from the perspective of our remit as the committee with responsibility for the environment, that is, in relation to the environmental effect of the release of greenhouse gases or CO2. As a matter of interest, I am not aware of the reason these gases are called greenhouse gases. Perhaps they should be called fossil fuel gases or burning gases. It is not fair to link greenhouses to CO2 gases released as a result of burning fossil fuels. I note that the burning of turf, coal and oil, in that order, releases the highest emissions of CO2. On the mechanics of the proposal, would one impose a tax on the burning, cutting or sale of turf?
I am sure the Minister for Finance would think of something.
I am sure he would, but how would one tax the poor man in Connemara who cuts and burns his own turf?
There are also a few of them in County Kildare.
Given that Bord na Móna is located in County Kildare, that is a completely different issue. Our responsibility is to work out the mechanics of the proposal from the perspective of the environment. I am inclined, therefore, to support Deputy Cregan's suggestion. We should have a separate input on the issue, after which we can consult the other committees or examine their submissions to ascertain if we can help or correct their work.
I agree with the two previous speakers. It is expected that a number of submissions will be made by various committees and the overall process will involve evaluating the merits of each of them and take them in the round. As a committee we have to apply ourselves to the task of taking into account significant issues which form part of the bigger picture. We should not be sucked into a presumption that to have a carbon tax would be more costly than not to have it because one way or the other, we have signed up to legal obligations.
Emissions trading is not the whole story either. Given that it is not possible for all our excess emissions to be traded, this will be a very costly operation which will possibly cost us in terms of economic performance and jobs, irrespective of whether we introduce a carbon tax. Let us not, therefore, be drawn into an assumption that not introducing a carbon tax would somehow amount to a free lunch - it would not and could be even more costly than having a carbon tax.
With regard to the assumption that a carbon tax would adversely affect competitiveness, the ESRI reports on this issue clearly state we are a low energy economy compared to other economies. A carbon tax introduced across the board, here and in other countries, would, therefore, increase our competitiveness because we have managed to develop without the same level of heavy industry one finds, for example, in the Ruhr Valley, where there are obviously greater concerns about carbon taxes than there are here.
According to the ESRI, competitiveness could be enhanced by a carbon tax. Sectors of the economy - low energy and renewable energy sectors - are finding it difficult to manage as they are adversely affected in terms of competitiveness by the absence of a carbon tax. We need to keep an open mind on this issue, for example, when we are asked to evaluate the potential impact of a carbon tax on competitiveness or incomes.
We should be seeking a more equitable society and this objective should be the preamble of our submission. The issue of a carbon tax highlights all the more how inequitable is our society in that, for example, low income families would be more adversely affected than others because they have a greater dependence on peat and coal as opposed to natural gas. There is, therefore, a bigger picture.
Unfortunately, this committee is not able to solve all the world's problems. We should, however, set ourselves the task of evaluating this issue, based on the best international practice and scientific information available and the expertise emanating from people charged with professional responsibilities in this area, such as the ESRI, and drawing up a document which will, I hope, improve the Government's consultation paper. There is considerable scope for so doing.
It would be wrong if we were to get caught in the headlights of this issue by stating we cannot do anything about it until we have consulted the other committees or by requiring more time. This issue is long overdue and we face a deadline which will not go away between 2008 and 2012. As has been stated, we are facing enormous fines. The cost to this country, even without a carbon tax, will be much greater than if we set ourselves the task of reducing our dependence on fossil fuels. We have to set ourselves some kind of vision in which we move away from fossil fuel dependency. That is possible but it requires far more imagination and dedication than we have seen to date. Each of us could return to the next committee meeting with our homework done, having put together and researched a document with the help of whatever research facilities the committee can provide, perhaps in conjunction with people who have worked with the ESRI for a long time, such as John FitzGerald. We should be able to prepare a document together under the name of this committee. Let other committees look at it to try to obtain some useful information from it.
While I certainly respect the views of Deputy Sargent on this issue, if we are to be serious about trying to reduce emissions we have to look at alternatives as well. I do not think it is good enough to propose some form of carbon energy tax that will save the environment: we need imaginative proposals on how to substitute energy derived from fossil fuels with energy derived from wind farms and offshore developments for energy replacement. We have to look beyond the implementation of carbon energy. Therefore, if we brought in expertise from outside we could make a firm proposal, not just on carbon energy tax but on how we address the problems carbon energy is creating. Difficulties and objections arise in respect of wind energy. Hydroelectricity has posed problems in respect of hen harriers. There is a huge agenda to be considered. The simplistic argument for having a carbon energy tax as a way of addressing the issue is problematic. We should have a forum on the subject whereby we would obtain views from outside our remit. Professionals could advise us on how to provide alternatives to carbon based fuels, such as wind or wave energy, as opposed to just taxing them.
Having listened to the contributions, it seems that we are heading in the direction of addressing this issue ourselves as a committee rather than having a joint meeting of all the committees that are affected by it. If this is the way we are going, I propose that there should be a full debate in the House so that the environmental, social, transport and competitiveness aspects of the issue are addressed in their totality before the Government makes a decision on the issue.
If we are addressing the issue ourselves as a committee, there is a piece of the jigsaw missing, namely, the impact the introduction of a carbon tax in Ireland will have on the reduction of emissions into the environment. I presume that at the end of this discussion the Chairman will make some arrangements for a meeting of the committee which will examine this matter in detail. Before it takes place, I propose that the Department of the Environment and Local Government and the Environmental Protection Agency should be asked to give this committee their assessment of what impact the introduction of a carbon tax will have on emissions. If one considers the paper by the Department of Finance one will note that there is an assessment made of what impact it will have on the household budget, the consumer price index, competitiveness and everything except what the tax is supposed to be about in the first place, namely, reducing emissions to the environment.
If we had the views of the Department of the Environment and Local Government and the Environmental Protection Agency it would allow us to make some informed comment on the proposal. I say this because I believe there is a working assumption in Government that the introduction of a carbon energy tax will have very little impact environmentally. I believe there is an assumption that the introduction of such a tax will do two things: raise revenue and enable the country to buy out its international obligations by buying credits from poor countries and doing so on the backs of money raised from poor people here. We need to give serious consideration to this issue because if the introduction of a carbon energy tax will not reduce emissions, which is what it is supposed to do, a serious question must be asked about its purpose.
A carbon tax cannot reduce emissions unless alternatives are in place. Charging people extra for their petrol will not reduce emissions if people keep buying the same amount of petrol anyway and do not have a decent public transport option to change to. Charging extra for electricity generated from fossil fuels will not do much for the environment unless there are serious alternatives in terms of renewable energies, etc., to which people can switch.
Our starting point as a committee should be to hear from the two statutory agencies - the Department of the Environment and Local Government and the Environmental Protection Agency - which should know what this proposal will do for the environment. What is their calculation? What are their models? What is the knock-on effect of an extra euro on a particular fuel? How many tonnes of emissions will it reduce, or do the agencies know or care? Is this what the tax is about in the first place? This should be our starting point. I presume the Chairman will arrange a special meeting of the committee to examine this matter. If so, I propose that we should ask the Department and the EPA for their assessments and the models they have regarding the impact of the tax on improving the environment.
I support what DeputyGilmore said. We have now more or less agreed that the committee should be certainly looking at this issue from an environmental point of view. I agree wholeheartedly that all the points made by the various committees concerned could be brought together in the Dáil Chamber, by way of debate, which I presume will be taking place anyway with a view to legislation. None of us who is advocating that we examine the issue as a single committee is saying that we should not have outside expertise to help us on our way. Aughinish Alumina has already made a submission to the committee in which it outlined its view on the introduction of carbon taxes vis-à-vis emissions trading. This is something we can revisit when we are formulating our submission. It is of great significance that we obtain the view of the Department of the Environment and Local Government on this issue because the remit of this committee is to ensure that we can protect and enhance the environment. We must also obtain the view of the policing body, the EPA.
As a committee we should deal with this issue from an environmental point of view. I welcome any outside expertise we can obtain, whether it be from within Departments of from industries such as Aughinish Alumina, who will be affected by the measure. We should hear all sides of the argument to help us formulate our opinion and then take it a stage further. When we finish our deliberations we could then listen to the views of the other committees. We should remain focused as an environment committee and not let the views emerging from the committees responsible for transport, finance or agriculture, though they be important, influence our decision on whether we should have a carbon energy tax.
If it is the view of members that we should hold such a meeting and invite officials from the EPA and the Department of the Environment and Local Government, we will do so.
The ESRI worked on this issue for a long time and would have important views to offer, particularly in light of the fact that, as has been stated, there are choices upon which we must adjudicate regarding whether this will be a revenue-neutral measure, whether, as is proposed, the revenue should be ring-fenced or whether it should be a general power of taxation. We are expected to have some kind of view on these matters and, as a committee with responsibility for the environment, ensuring that the measure is environmentally sound.
If all members are satisfied with that, we will also invite a representative of the ESRI to attend the meeting. We can write to the Government Chief Whip - it could also be included in the report - on our desire that a full debate on the wider issues should take place in the House. Would Wednesday of next week be a suitable date for the meeting?
There is a meeting of Labour's parliamentary party on that day.
Would the following day, Thursday, be acceptable?
The Chairman is going to be obliged to hold the meeting next week because the deadline is 30 September and we will have to have more than one meeting on the matter. It is important that we agree to hold the meeting next week.
Thursday?
I cannot attend on Thursday. What about Tuesday?
I understand that the Fine Gael Party is having a get-together on Tuesday and Wednesday of next week. Would Deputy Sargent be able to attend on Thursday?
It would be difficult for me to do so. If everyone else is intent on holding the meeting on Thursday, I will try to rearrange my schedule. However, I am supposed to attend a party meeting in Galway. With the exception of holding the meeting on Monday, I see no other alternative.
On organising the meeting, we would like to give the officials as much time as possible to prepare for it and holding it on Monday would not give them much time. However, we would like to facilitate all members in terms of their contributing to the debate.
I will do what I can to be present on Thursday.
We have provisionally booked a room for 11.45 a.m. on Thursday of next week. Is it agreed that the committee re-enter private session to deal with a number of items? The joint committee went into private session at 12.14 p.m. and adjourned at 12.25 p.m. until 11.45 a.m. on Thursday, 18 September 2003.