Dáil Éireann Debate, Tuesday - 1 March 2022
241. Deputy Noel Grealish asked the Minister for Finance the plans he has to bridge the disparity between the EU emissions trading scheme carbon price and the Irish carbon tax of €41 set out in Budget 2023; and if he will make a statement on the matter. [10848/22]
View answerThe EU ETS operates in all EU countries plus Iceland, Liechtenstein and Norway (EEA-EFTA states) and covers approximately 10,000 installations in the power sector and manufacturing industry, as well as airlines operating between these countries.
The EU ETS works on the 'cap and trade' principle. A cap is set on the total amount of certain greenhouse gases that can be emitted by the installations covered by the system. The cap is reduced over time so that total emissions fall. Within the cap, installations receive emissions allowances, which they can trade with one another as needed.
The Irish Carbon Tax is a national tax which is applied to mineral oils, solid fuels and natural gas. In line with the Programme for Government policy approach to Carbon Tax, Finance Act 2020 legislated for a series of annual increments in the Carbon Tax rate leading to a rate of €100 per tonne of tonne of CO2 emitted in 2030. This trajectory of increases transparently signals to households and businesses the specific rate increases which they can expect to occur every year out to 2030, thereby affording a period of gradual transition.
The ETS, as a market based system applying to large installations, operates through an entirely different structure to the domestic carbon tax. While the ETS carbon price changes periodically, the rate of carbon tax is set out in the 2020 Finance Act. The Government remains committed to the carbon tax rates outlined in the Programme for Government and Finance Act.
