Although Carbon Tax was introduced in Budget 2010 for fossil fuels, its application to solid fuels was delayed to allow for the development of a robust mechanism to counter the large scale sourcing of coal from Northern Ireland where lower sulphur standards apply. The Department of the Environment undertook to provide such a robust mechanism in conjunction with the National Standards Authority of Ireland (NSAI). Such a mechanism is in place since June 2011 and the Air Pollution Act (Marketing, Sale, Distribution and Burning of Specified Fuels) Regulations 2012 specify the environmental standards for coal placed on the market and provide the regulatory framework in relation to the distribution and sale of coal in the State.
In particular, the Regulations require that all bituminous coal sold and used outside smoky coal ban areas for residential use outside those areas must have a sulphur content of no more than 0.7%, which is lower than that in Northern Ireland and therefore bituminous coal supplied to Northern Ireland standards for sale on that market may not be sold in the State. Compliance with the Regulations is be enforced by local authorities. A verification mechanism, SWiFT 7, has been developed by the National Standards Authority of Ireland (NSAI) for the verification of sulphur content in coal. This provides for a robust mechanism to verify the sulphur content of coal to national standards.
Suppliers who produce and supply solid fuels in contravention of the Regulations are subject to investigation and prosecution under the Air Pollution Act by local authorities charged with enforcing the regulations and preventing such supply.
The application of the carbon tax to solid fuels was further postponed in 2012 given the overall tax increases in Budget 2012 including in the standard rate of VAT.
Budget 2013 commenced the application of carbon tax to solid fuels but I chose not to introduce this until after the 2012/2103 winter period and opted to introduce the tax in two phases i.e. €10 per tonne of CO2 from 1 May 2013 and a further €10 per tonne of CO2 from 1 May 2014 thus bringing the carbon tax on solid fuels in line with that on all other fossil fuels i.e. at €20 per tonne of CO2.
The introduction of Carbon Tax was about sending a price signal that there is a cost associated with the consumption of fossil fuels to the detriment of the environment. It should also be noted that solid fuels have the highest carbon content of all fossil fuels. As a result they are considered the dirtiest fuels and given the environmental impact it is important that they are taxed.
While tax increases are unpopular, where Member States are under fiscal pressure, it makes sense to increase taxes in areas where some benefits can arise, in this instance a carbon tax promotes energy efficiency, reduces emissions and reduces our dependence on imported fossil fuels.
Accordingly I do not intend to reverse the Carbon Tax increase on solid fuels from 1 May 2014.