Dáil Éireann Debate, Thursday - 16 June 2022
29. Deputy Ged Nash asked the Minister for Finance if he plans to introduce a windfall tax on the super-normal profits of energy companies; if he will provide details of any engagement that he and his officials have had with the Minister for the Environment, Climate and Communications, his officials and the Commission for the Regulation of Utilities on this issue; and if he will make a statement on the matter. [31010/22]
Amharc ar fhreagra37. Deputy Alan Farrell asked the Minister for Finance his views on a windfall tax in the context of energy companies in Ireland; and if he will make a statement on the matter. [30549/22]
Amharc ar fhreagraI propose to take Questions Nos. 29 and 37 together.
Energy policy, including increasing costs of energy supply and the taxation of profits, is a matter of key concern to the Government. There are many strands to this policy, including energy security, rising input costs and costs to consumers, and the need to reduce dependence on fossil fuels. The complexities of the energy market and the range of producers and contracts must also be acknowledged. For example, the Renewable Energy Support Scheme (RESS) contains strong consumer protection measures, with wholesale market revenues above the auction price returned to electricity consumers through the Public Service Obligation Levy. All of these aspects must be considered in connection with proposed new policy measures.
In April, the Government approved and published the National Energy Security Framework, which sets the overarching response to the impacts of the war in Ukraine on the energy system in Ireland. The Framework includes a commitment to work with the European Commission and other Member States to consider the proposals set out in the EU’s REPowerEU plan. Under REPowerEU, it is considered that taxation or regulatory measures aimed at removing gains created by the current crisis situation could be considered.
Energy policy is under the remit of the Department of the Environment, Climate and Communications (DECC). The Energy Security Energy Group, which is chaired by DECC and includes the Commission for Regulation of Utilities, is considering these issues in its role overseeing the implementation of the National Energy Security Framework.
Officials in DECC are working to examine where gains created by the current crisis situation may be occurring and to consider what, if any, action would be appropriate having regard to over-arching energy policy. This includes engaging with Department of Finance officials to determine potential fiscal response measures. This work, which will help inform the implementation of the National Energy Security Framework, includes consideration of potential negative impacts of any such action. For example, there is a risk that a windfall tax may lead to higher consumer costs and negatively impact upon investment in the energy sector, particularly in the area of renewables. This would in turn impact on the Government's ambitions to tackle climate change through the reduction of carbon emissions.
A well-functioning EU electricity market is crucial for the integration of our Internal Energy Market and supporting investment in new renewables. The best long-term approach for Ireland to insulate consumers from volatility on international wholesale energy markets is to invest in energy efficiency and renewable energy. Cutting our dependence on fossil fuels and generating power from our own renewable sources will ensure a cleaner, cheaper energy future in the long term.
I would also note that the Government has taken a number of measures to reduce the burden on consumers in relation to the cost of energy. This includes providing €200 worth of energy credit to every household in the country; reductions in fuel excise duty; and a reduction in the VAT rate for electricity and gas.
