The Government must push ahead with the introduction of a carbon tax in the December Budget so that it can keep faith with the commitments it made under the Kyoto Protocol on global warming.
All EU Member States have pledged to reduce carbon dioxide emissions in order to protect the environment. And, as the fastest growing economy in Europe, Ireland has a particular responsibility to adopt a more efficient strategy in the use of energy so as to minimise climate change.
The employers' body IBEC has suggested the proposed tax should be "shelved" by the Government. Arguing that the tax was designed to increase the cost of fuel so that energy usage would drop, it said recent steep rises in oil prices and a reduction in carbon dioxide emissions had made the tax unnecessary. The representations by IBEC are understandable, given that a carbon tax will increase manufacturing costs for many of its members. But it is important to be clear on the fundamental reason for this tax: it is to reduce the amount of carbon dioxide emissions, not to cut energy usage. More efficient technologies and cleaner energy can compensate for dirty fossil fuels. And it is important that Ireland, which is twice as dependent on imported oil and coal than other EU states, should begin the transition to cleaner energy as quickly as possible.
The Government has been criticised by the EU Commission for the manner in which it favoured big companies, with large energy bills, in the allocation of carbon dioxide quotas earlier this year. Smaller industries and the consumer may have to bear an unfair burden. A study by the Economic and Social Research Institute found that, properly managed, the introduction of a carbon tax would leave national output unchanged, or even slightly higher. At the same time, the cost of the tax for ordinary households, through higher fuel and electricity charges, could be neutralised through income tax cuts or improved social welfare and fuel allowances.
An EU emissions trading system will operate from next January to allow companies that exceed their quotas to purchase compensatory amounts from compliant organisations. Before that happens, however, the Government must clarify its policy on how a carbon tax is to be levied, how emissions will be monitored and who will be in charge of collecting the tax. Opposition persists within Cabinet to its introduction, because of the effect it may have on the business community, and this must be resolved.
The Minister for the Environment, Mr Cullen, has emphasised that Ireland already exceeds its carbon dioxide emissions target by 25 per cent and that our projected economic growth is likely to worsen that situation. The Government must encourage the development and use of energy-efficient technologies to combat global warming. A carbon tax would represent a psychological commitment to cleaner energy and dedicate the Government to balanced industrial development.