Three days of tough negotiations between EU environment ministers in Luxembourg last month produced a legally binding agreement which obliges Ireland to limit the growth in its greenhouse gas emissions to 13 per cent above their 1990 levels by 2010.
This is a tougher target than the 15 per cent cap we agreed to accept under the previous EU "burden-sharing" agreement, prior to last December's climate change conference in Kyoto, and achieving it will represent a significant challenge for every sector of the Irish economy.
There had been an expectation that Ireland might have been allowed more leeway because the overall EU target of cutting greenhouse gas emissions by 8 per cent agreed under the Kyoto protocol is less onerous than the 15 per cent cut tabled by the EU itself at the conference.
But the Minister for the Environment, Mr Dempsey, signed up to the Luxembourg deal after persuading both the Taoiseach, Mr Ahern, and the Minister for Finance, Mr McCreevy, that the 13 per cent cap on the growth of our greenhouse gas emissions was achievable.
He was assisted in securing their agreement by a recently published consultancy study which showed that there was a range of technically and economically feasible options to limit these emissions at little or no cost - though certain sectors would be hit harder than others.
The study, by the British consultants ERM in association with Byrne O Cleirigh and the ESRI, suggested that the imposition of an energy tax would be the "least-cost option", particularly if the revenue it generated was used to reduce the employers' share of PRSI contributions.
It also suggested a number of "targeted measures" such as converting the 900-megawatt coalfired power station at Moneypoint, on the Shannon Estuary, to run on less-polluting natural gas; this alone would cut our carbon dioxide emissions by 3.3 million tonnes a year.
Under a "business as usual" scenario, the study suggested that the Republic's greenhouse gas emissions would increase by up to 24 per cent on 1990 levels by 2010 - mainly because of unprecedented economic growth and the consequent rise in energy consumption.
One of the main tasks facing the Government, if it is to achieve the target agreed by Mr Dempsey in Luxembourg, will be to "de-couple" energy and economic growth by encouraging more efficient use of energy resources by industry, commerce and even householders.
The best way of doing this would be to impose some form of energy or carbon tax - something the Department of Finance has traditionally resisted on the grounds that it would make industry in Ireland less competitive. This view is also taken by IBEC, the main industry lobby.
Their argument is that Ireland cannot "go it alone" in advance of EU-wide agreement on the issue. However, although an EU carbon tax was first mooted in 1992 - the year of the Earth Summit - no progress has been made because of the need for unanimity on fiscal matters.
Senior European Commission officials accept that the repeated failure of the EU Council of Finance Ministers (EcoFin) to deal with the issue tends to undermine Europe's "leadership role" in the continuing international negotiations on measures to combat climate change.
But Mr James Currie, the new director-general of the Commission's environment division (DGXI), told The Irish Times last week that he believed it was "only a matter of time" before the issue of an EU-wide energy or carbon tax would have to be faced by the 15 member-states.
"It's going to take time to deliver because the finance ministers have been understandably focused on the euro. But I'm convinced that something will be delivered in the longer term because what the euro is going to do is bring taxation much closer to the top of the EU agenda."
Mr Currie emphasised that a common approach to energy taxation would produce benefits in terms of competition and the environment by encouraging more energy conservation and efficiency as well as providing business opportunities in developing new technologies.
Referring to the Luxembourg agreement, he said: "It was absolutely essential for us to get a deal, and get it out of the way at this stage, because Europe's credibility was at stake. Everybody has had to sacrifice something, and Ireland is not alone in that respect."
The British EU presidency gave the issue a high priority, and Mr John Prescott, the UK's deputy prime minister, said the deal "keeps up the momentum of international action to tackle climate change and shows Europe leads the way in turning the rhetoric of Kyoto into action."
There had been strong resistance from some surprising quarters. The Netherlands, supported by Denmark and Finland, sought to make member-states' commitments conditional on the adoption of greenhouse gas reduction measures - such as a carbon/energy tax - at EU level.
The Dutch, who are in the frontline of climate change because much of their country lies below sea level, had pledged to cut their emissions by 10 per cent in advance of the Kyoto conference. But when it came to Luxembourg, they doggedly stuck to a figure of just 6 per cent. It is believed that the Dutch Minister for the Environment, Ms Margaretha de Boer, was under instructions from her government not to give an inch because of its strong fears that any further concessions - even an extra 0.5 per cent - could slow down economic growth.
Denmark, which has a quite exemplary environmental record, entered a caveat, saying that it could achieve a reduction of only 17 per cent through its own efforts and that EU-wide measures would have to be adopted if it was to deliver the 21 per cent cut to which it is committed.
Austria managed to get its target reduction slashed by almost half, from 25 per cent pre-Kyoto to just 13 per cent, while Germany had its target cut from 25 per cent to 21 per cent. However, the UK agreed to a more ambitious figure of 12.5 per cent - up from 10 per cent.
There had been fears that the less-developed "southern states" - Greece, Spain and Portugal - would make a new burden-sharing agreement impossible. But in the end, just like Ireland, they agreed to tighter limits on the growth of their greenhouse gas emissions.
"This is `put your money where your mouth is' time", as Mr Currie said in Dublin last week. He also made it clear that a monitoring programme had already been set up to check on whether member-states are working towards their targets, to achieve an overall EU cut of 8 per cent.
The crunch issue is whether the Government will have the courage to take on powerful vested interests such as the farming lobby, which may not be fully aware of the implications of the Luxembourg deal for agricultural practices in Ireland, notably the overuse of fertilisers.
Ireland's emissions of methane, one of the three principal greenhouse gases, are disproportionately high because of our large cattle herd. And while the cattle will continue to emit methane, the volume could be cut by changing their feed or reducing the application of fertilisers.
It has been calculated by the Environmental Protection Agency that farmers are spending £25 million a year more than is actually required on nitrates and phosphates. The imposition of VAT on such fertilisers, which are currently VAT-free, would help to curtail their over-use.
Transport has outstripped electricity generation as the fastestgrowing contributor to Ireland's greenhouse gas emissions, accounting for half of the projected increase to 2010. By then, there will be 1.47 million cars and 250,000 trucks on the road, though these may be under-estimates.
Even with improved fuel performance, this volume of traffic - more than 50 per cent of the current figure - will cause problems. But will the Government take on the car lobby by making company cars, which account for 40 per cent of new car sales, no longer attractive as a perk?
Vehicle registration tax and excise duty on petrol could be tweaked to favour smaller, more efficient vehicles and a switch to less polluting fuels. Integrated traffic management, including selective road pricing to discourage car commuters, and better public transport are also needed.
Other measures will have to be taken, such as improving the energy efficiency of homes as well as commercial and industrial premises through higher standards for both new and existing buildings. A switch from oil and coal to less carbon-intensive natural gas would also help.
Gas is expected to win a much larger share of the energy market following deregulation but, since most of it will have to be imported in the future, this raises the issue of security of supply. More afforestation would provide "carbon sinks", to be offset against rising emissions.
But what about Europeat-1, the EU-approved peat-fired power station planned for the midlands, which will emit 900,000 tonnes of CO 2 every year? Or the large cement plants proposed for Mayo and Cavan which, together, could add a further 3 per cent to our CO 2 emissions?
All in all, the Government will need to co-ordinate its policies across a broad range of sectors if Ireland is to have any chance of honouring the ambitious - and now legally binding - target which the Minister for the Environment signed up for in Luxembourg last month.