Dáil Éireann Debate, Tuesday - 26 April 2022
550. Deputy John Paul Phelan asked the Minister for Public Expenditure and Reform when he proposes to introduce the necessary legislation to support the Government’s policy concerning the allocation of the revenue collected from the carbon tax; and if he will make a statement on the matter. [19689/22]
View answerThe Finance Act 2020 legislated for a schedule of annual carbon tax increases over the period 2021 – 2030. All revenues resulting from the increases in carbon tax will be allocated in line with the commitment in the Programme for Government to use the revenue raised from these increases to fund €9.5bn in additional spending.
- €5bn of the expected €9.5bn in additional carbon tax receipts will be invested in energy efficiency;
- €1.5 billion of additional current funding will be made available over 2021 – 2030 for new schemes that will assist farmers to address the climate and environmental challenges in the agricultural sector;
- The remaining €3 billion in funding will be explicitly used to ensure that increases in the carbon tax are progressive by tackling fuel poverty and providing for a Just Transition.
Each year, alongside the Budget, my Department issues a publication on the use of carbon tax funds for the forthcoming year. This paper details the specific allocation of carbon tax funds in line with the Programme for Government commitments and provides some detail on the programme areas that will receive additional funding.
In 2022, €202 million of this additional carbon tax revenue has been allocated to residential and community energy efficiency. This funding has permitted the launch of a range of new and expanded supports for energy efficiency, including 80% grants for attic and cavity wall insulation and grant support of up to 50% for deep efficiency measures. More than half of these funds are also being used to provide free of charge energy efficiency upgrades to households in, or at risk of, energy poverty.
A further €174m of carbon tax revenues in 2022 are being spent on targeted social protection measures, such as increases in the fuel allowance, the living alone allowance, and the qualified child payment. Analysis has demonstrated that this allocation to compensatory welfare measures means that the net impact of the carbon tax is progressive in 2022. Households in the bottom four income deciles will see all of the cost of the carbon tax increase offset. Households in the bottom three deciles are better off as a result of the carbon increase and the compensatory welfare measures.
The remaining revenues (€36m) have been allocated to fund the continuation of the 2020 and 2021 Carbon Tax Investment Programme. The specific programme allocations are detailed on the Department's website and include support for the Just Transition Fund, peatlands rehabilitation, the Greenway and Urban Cycling programmes, grants for Electric Vehicle purchase and infrastructure, green agricultural pilot schemes and a contribution to the Green Climate Fund, which provides financial support to reduce greenhouse gas emissions in developing countries and to help vulnerable societies adapt to the unavoidable impacts of climate change.
As the Deputy will note, my Department and I are committed to providing complete transparency on the allocation of carbon tax revenues. Full details on 2022 allocations are available in the Departmental paper "The Use of Carbon Tax Funds 2022", available at - assets.gov.ie/201264/5c96e5cd-b663-4887-bf2e-e13a393ffc50.pdf
