Dáil Éireann Debate, Wednesday - 9 November 2016
76. Deputy Eamon Ryan asked the Minister for Finance the reason combined heat and power engines are exempted from carbon tax in view of the fact that the signing of the Paris Agreement suggests significant efforts will need to be made to divest away from fossil fuels. [34067/16]
View answer77. Deputy Eamon Ryan asked the Minister for Finance the foregone taxation revenue from exempting combined heat and power engines from carbon tax. [34068/16]
View answerI propose to take Questions Nos. 76 and 77 together.
Combined Heat and Power (CHP) is the simultaneous generation of usable heat and electricity in a single process. The dual process of using energy inputs to generate both heat and power is the most efficient use of fuel with an energy efficiency of up to 80%, which is significantly higher than individual processes. It makes use of the heat produced in electricity generation instead of releasing it into the atmosphere.
The Department of Communications, Climate Action and Environment's White Paper on Ireland's Transition to a Low Carbon Energy Future 2015-2030 indicates that CHP can provide a method of improving efficiency of energy use leading to emission reductions, as well as committing to the development of a policy framework to encourage the growth of CHP. Biomass CHP as a power source will make a contribution towards achieving 2020 targets in both the renewable electricity and heat sectors. The paper takes into account European and International climate change objectives and agreements, as well as Irish social, economic and employment priorities.
In that context, my colleague the Minister for Communications, Climate Action and Environment wrote to me asking that I consider the supports for the incentivisation of CHP Plants in Budget 2017. Separately, the Commission for Energy Regulation (CER) is updating the certification processes and will now base certification on the fuel used in the highly efficient production of electricity in CHP Plants. This will provide relief retrospectively based on the actual data used in highly efficient production of electricity.
Work is ongoing to transition away from the use of fossil fuels, however, in the meantime, it is logical to ensure that when fossil fuels are used they are used as efficiently as possible. It is for that reason I decided to provide a full relief from the carbon tax when the fuel is used in a highly efficient process.
I am informed by Revenue that the partial carbon tax relief for fuel used for environmentally friendly CHP installations was introduced in the Finance Act 2012 and the cost to date of that relief is just under €760,000.
The following table contains the amounts claimed in 2014, 2015 and 2016 in respect of the relief and shows the total amount claimed since introduction.
|
YEAR |
Number of Claims |
Amount Refunded |
|
2014 |
2 |
€82,133.00 |
|
2015 |
24 |
€264,733.51 |
|
2016 |
44 |
€411,754.60 |
|
|
Total |
€758,621.11 |
The Finance Bill 2016 includes a proposal to introduce a full relief from carbon taxation for fuel used in CHP to produce high efficiency electricity. I am advised that Revenue has made an approximate estimate of just under €2m to provide full relief (€1.87m) for all fuel. This estimate is based upon information currently available which is largely composed of projected energy efficiency performance of CHP installations. This estimate also includes data concerning CHP units that are still in the planning stage, but have been included to avoid underestimation.
