Dáil Éireann Debate, Tuesday - 26 April 2022
524. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 78 of 10 November 2021, the estimated revenue raised in carbon tax, relative to the rate of €26 per tonne, in the years 2022 to 2030, were the increases due to take place on 1 May 2022 and 12 October 2022, respectively, not to proceed in tabular form. [20685/22]
View answerAs the Deputy is aware, the most recent projection of additional carbon tax revenues provided by my Department for the period 2021 to 2030 amounted to €9.2 billion, based on the Government’s commitment to increasing the amount that is charged per tonne of CO2 emissions from fuels to €100 by 2030. This is a key pillar underpinning the Government’s Climate Action Plan ambitions to halve emissions by 2030 and reach net zero no later than 2050. The annual breakdown of these receipts was provided in reply to PQ No.78 of 10 November 2021. Further details were provided to the Deputy in relation to this request in response to PQ No.172 of 18 November 2021 and PQ NO.68 of 24 November 2021 in relation to the methodology behind this calculation.
As was previously noted, the projections for carbon tax receipts are based on a declining carbon tax base reflecting changing behaviour in response to the tax, amongst other factors. The projections were not based upon a 51 per cent reduction in emissions relative to 2018 levels. These estimates were based upon official projections from the Environmental Protection Agency (EPA) published, in June 2021 which represented an independent assessment of Ireland’s emissions trajectory to 2030. Specifically the estimates are based on the EPA’s non-ETS (EU Emissions Trading System) ‘WAM’, or with additional measures scenario for greenhouse gas emissions, which includes the Government’s commitment to a €100 per tonne carbon tax by 2030. Currently, the EPA has not published an alternative emissions scenario that incorporates carbon tax changes in the manner that the Deputy has requested. Therefore it is not possible to estimate the impact on carbon tax receipts in a similar manner to previous calculations.
In relation to the rate of carbon tax, it is important to acknowledge the Government’s continued commitment to the carbon tax 2030 trajectory and to note that revenues raised from the additional ring-fenced carbon tax revenues will be used to fund Just Transition measures.
For context, it should also be noted that changes to carbon tax rates are having a relatively small impact in terms of the rising energy costs being experienced by households and firms. Indeed, it is clear that the carbon tax is not the cause of current energy price inflation. Nonetheless, the Government recognises the difficulties such rising costs can create and has therefore taken a range of measures, such as the €200 electricity credit and reductions in fuel excise duties, to support household incomes.
More broadly, over the medium to long term, the best way to protect the livelihood of citizens and our economic interests from the impact of international fossil fuel prices is to reduce our dependence on them. As set out in the CAP 2021, we will achieve this through the progressive decarbonisation of Irish society and through the steps that will be taken to meet the Government’s commitment to reach net zero greenhouse gas emissions by 2050.
