A series of "green tax" options to reduce Ireland's rapidly increasing energy consumption and carbon dioxide emissions are outlined in a Green Paper, published yesterday, which focuses on increased fuel taxes and initiatives to curb growth in transport.
The Green Paper was issued by the Minister of State at the Department of Public Enterprise, Mr Joe Jacob, who confirmed for the first time that the Republic would next year exceed the limit on greenhouse gases set by the UN Kyoto protocol despite being only halfway through the 20-year period of the agreement.
The picture of Irish energy consumption outlined in the Green Paper on sustainable energy will put further pressure on the Government to introduce meaningful green taxes sooner rather than later, if the economy is to avoid the considerable costs and penalties associated with allowing current levels of emissions to continue.
The Minister said that such options would have to be considered by the social partners in their deliberations on an agreement to succeed Partnership 2000. He did not envisage the Government taking unilateral action on such taxes, but they were "going to be the subject of discussions".
While the Green Paper indicates that some form of "phasing-in of progressive tax increases is needed", early provision should be made to allow Ireland to benefit from the options of "emissions trading" with what are known as "carbon dioxide credits". This is, in effect, a quota system, where credits on emissions may be bought or sold between or within states. Emissions trading "provides important room for manoeuvre for the Irish economy", the Green Paper notes, and could prove to be the "least costly route, compared to a rigid system of high green taxes, which could undermine competitiveness".
If the Republic took the radical steps needed to reduce emissions promptly, Mr Jacob was confident that the economy would be able to engage in carbon trading "on the profit side".
The tax options outlined include a carbon tax as an incentive to all sectors to reduce emissions. This would be linked to lowering other discretionary taxes (such as PRSI) and would be underpinned by special supports for those on low incomes. Tax concessions could be granted to energy-intensive industries committed to achieving increased energy efficiency.
A "rebalancing" of vehicle registration tax, to reflect fuel consumption and/or emission levels, was another option. The Green Paper conceded that "current road tax is in some respects a poor proxy for taxes on petrol, as a large car that is little used has little environmental impact".
The document suggests that tax regimes for company cars could be altered to ensure better "energy efficiency", while "green" commuter measures could be introduced to cut back on car usage.
The Government is committing £126 million under the National Development Plan to promote moves towards sustainable energy use. Some £29 million will be used to put the Irish Energy Centre on a statutory footing; £40 million will go to research and development; £37 million will be spent on promoting renewable energy - notably combined heat and power projects - and £20 million is being set aside for energy-efficient homes and buildings.
The Green Paper sets a target for an increase in electricity generation from renewable energy sources - mainly by switching from solid fuel/oil to natural gas - from 180 megawatts to 500 megawatts by 2005. A strategy group is to be set up to help expedite wind energy development.
IBEC welcomed the Green Paper, but warned against concentrating solely on carbon dioxide in tackling Ireland's greenhouse gas problems. It pointed out that the document did not deal with agriculture, "which accounts for 35 per cent of greenhouse gas emissions".
