I thank the Deputy for his questions. I would have expected him to ask such questions, many of which are the same as the ones I asked myself. This area was one of the most difficult for me to understand. I spent months trying to understand the creation of a market and how it would work. I had to be sure that it could deliver. If the figure emerges, for example, at €10 per tonne, companies will have two choices. They can do nothing and their allocation should roughly equate to what their CO2 emissions will be, which would mean they would have no gain. We do not want this, rather we want a real environmental approach to this issue. Built into this system is strong encouragement for companies to reduce. After 2012 circumstances will be far more severe for all countries, including Ireland.
If the average is about €10 per tonne, we expect many companies will see a value in making substantial investment in emissions reduction and may then see the benefit. The system contains a carrot and a stick. This represents learning by doing, the general view in the European Union. Potentially, much money is at stake. We all must be extremely careful about how we look at this matter, both from an Irish and European point of view. After 2008 there will be serious issues.
The Deputy also asked about the balance. The figures for actual output in Ireland are hotly disputed and depend on the consultants to whom one speaks. While some would put the figure much higher, I do not. I accept the figures on which we have based this assessment. However, others dispute them. While reputable companies have been employed to demonstrate that the figures may be higher, we are operating from the lower figure.
What has happened in the economy over the past ten years and more importantly over the past five or six years has had an impact on our energy needs. We negotiated a figure in 1998 which was 13% higher than our 1990 emissions level. However, we have now gone substantially beyond this. At one stage we were 31% higher but are now at about 28.5% or 29% higher. We have an enormous task to get back to the 13% level by 2012. At this stage the indications are that while we will achieve it, it will be at a price. This is not a pain free exercise and depends on everybody buying into and understanding the system.
There needs to be balance between competitiveness in the economy and environmental costs — a delicate balance. There is a very fine line. I believe we are at that line which could move a point or two one way or the other. We are not absolute in this, nor is any country in Europe. During the Council of Ministers meeting this week when the issue came up, we asked the Commission to give its views. Clearly, it had concerns about the allocations countries were considering making. While the Deputy is right in saying I had a lower figure in mind, I rightly had to listen to the arguments, as one would. I tried to balance all of the issues.