Dáil Éireann Debate, Tuesday - 27 April 2010
357 Deputy Joe Carey asked the Minister for Agriculture, Fisheries and Food his views on whether farmers here can absorb the impending carbon levy on agricultural diesel and whether the food industry here can remain competitive in view of the fact that fuel prices have risen dramatically in the past number of months since the introduction of the proposal in budget 2010; and if he will make a statement on the matter. [16345/10]
Amharc ar fhreagraThe implementation of a carbon tax on fossil fuels is, in the first instance, a matter for my colleagues, the Minister for Finance and the Minister for the Environment, Heritage and Local Government. The Finance Bill, 2010, introduced carbon taxation of mineral oils, which will apply to petrol, auto-diesel, kerosene, marked gas oil, liquid petroleum gas, fuel oil and natural gas. These increases, which, when VAT is included, amounted to 4.2 cent on a litre of petrol and 4.9 cent on a litre of diesel, arose from the application, in budget 2010, of a carbon charge on those fuels, at a rate equivalent to €15 per tonne of CO2 emitted.
When introducing the levy, Minister Gormley explained the principle of carbon pricing, noting that this mechanism is widely accepted as the most effective way to secure emission reductions. It is the basis of the EU's Emission Trading Scheme, which applies to the bigger emitters such as power generators and industrial plants and a significant number of food processing installations. Apart from installations that have already made very considerable emissions reductions through their participation in the EU's emissions trading scheme, no other sector of society is exempt from the tax.
The aim of the carbon tax is to promote economies in the consumption of fossil fuel and a consequent reduction in emissions. At present, each litre of gas oil, whether used in a tractor, diesel engine car or truck, generates the equivalent of almost 3 kilograms of Carbon Dioxide (CO2). In 2008, greenhouse gas emissions associated with the combustion of fossil fuel in the agriculture sector were over 850,000 tonnes of CO2 equivalent. The imposition of the carbon levy is not without consequence for farmers and for tillage farmers in particular. However, the agriculture sector will continue to benefit from a special reduced excise duty rate of 4.7 cent per litre in relation to marked gas oil, which is far below the excise duty rate of 41 cent per litre applied to auto-diesel.
Together with my Government colleagues, I intend to ensure that up to date guidance material is provided on how best to reduce fossil fuel based energy use. My colleague, the Minister for Finance has indicated me that the estimated amount of revenue arising from a carbon tax of €15 per tonne on marked gas oil or ‘green diesel' used by farmers is €12.5 million in a full year, and, being applied from 1 May, approximately €7 million in 2010.
Energy costs are a significant proportion of production costs for food and drink exporting companies. As costs in Ireland are above the EU average and our indigenous energy sources are limited, this is a competitive issue for the industry. The continuation of some costs rebate for large energy users and industry's own efforts to make their heat and power systems as energy efficient as possible have mitigated this to an extent but it requires continued attention as the Agrifood sector generates around 30% of our net foreign earnings from the indigenous manufacturing and primary sectors.
Greenhouse gas emissions from agriculture have not grown at the rate of other sectors but do account for almost 40% of Ireland's non-trading sector emissions. Teagasc is engaged in practical research at farm level on farming techniques that could contribute a modest but permanent reduction in the level of emissions. Addressing these critical issues, requires a greater commitment to, and implementation of, energy savings and efficiency measures, as well as the development and promotion of large scale uptake of energy from renewable sources. The government has encouraged measures relating to forestry, the growing of miscanthus and energy conservation to promote local and renewable sources of energy.
