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The Government has concluded its examination of carbon energy tax proposals and has decided not to introduce such a tax according to the Minister for Finance, Mr Charlie McCreevy, T.D.
After an extensive public consultation process, the Government has concluded that a carbon tax is not an appropriate policy option and instead will intensify action on the non-tax measures under the National Climate Change Strategy .
Mr McCreevy also added that the Government is fully committed to the Kyoto Protocol and the international response to combat climate change and that Ireland will meet its greenhouse gas emissions reduction target under the Protocol . He added that the carbon energy tax as proposed had been just one element of the Government s approach to meeting Ireland s commitment under the Kyoto Protocol to reduce emissions of CO2 the overall reduction required is of the order of 9 million tonnes per annum and the direct effect of the carbon tax would have amounted to a possible maximum reduction of just over 0.5 million tonnes.
The government has decided to replace this modest contribution by alternative measures, including support for emissions abatement mechanisms such as energy efficiency initiatives and also the purchase of additional carbon emission allowances on the international market.
The rationale behind a carbon tax was to change the relative price of fuels based on carbon emission, thereby altering consumption patterns to encourage energy efficiency and improve environmental quality. A carbon tax would have applied at a relatively low level to all carbon based fuels, including peat, coal, heating oil, diesel, petrol, natural gas and LPG. Revenue raised from the tax would be recycled and used for a range of purposes, including measures to help alleviate the effects on the poorest in society. However the consultation process derived that the environmental benefits would not justify the difficulties that would arise, particularly for households, from the introduction of such a tax.
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