I announced on Budget day the commencement of a Public Consultation on Options for revising the VRT system to take greater account of CO2 emissions. I invited interested parties to make submissions to my Department by 1 March 2007. A summary of a number of possible Options which are under consideration by my Department was contained in the Budget 2007 documentation and a longer consultation document has also been placed on my Department's website. In addition, an invitation for submissions was advertised in the national daily newspapers on 15 December 2006. A similar consultation is under way on motor tax, which is under the remit of my colleague, the Minister for Environment and Local Government. The intention is that from a target date of January 2008, cars with lower emissions will be rewarded with lower VRT and motor tax while increased taxes would be in place for higher emission cars. In so doing we hope to incentivise consumer behaviour which would be less harmful to the environment.
Another way of reducing emissions is to incentivise the purchase of alternative motor fuels. In this regard, I am pleased to inform the Deputy that in Finance Act 2006 I provided for significant tax measures to promote biofuels in Ireland.
This scheme, which received the necessary EU State Aid approval, commenced in November 2006 and will:
provide for excise relief on up to 163 million litres of biofuels per annum;
cost over €200m over 5 years;
when fully operational, result in CO2 savings of over 250,000 tonnes per annum;
meet a target of 2% transport fuel market penetration by biofuels by 2008;
help reduce our dependency on conventional fossil fuels, and
stimulate activity in the agricultural sector.