Topical Issues Debate carbon policy impact on sales of briquettes and employment in factories in Co. Offaly and Co. Tipperary - Response by Minister of State Eoghan Murphy T.D.

23.03.17

The introduction of Carbon Tax was about sending a price signal that there is a cost associated with the combustion of fossil fuels to the detriment of the environment. It should also be noted that peat briquettes have among the highest carbon content of all fossil fuels. As a result they are among the dirtiest fuels and given the environmental impact it is important that they are taxed.

Ireland is legally bound to reduce emissions by 20% on 2005 levels in 2020 and 30% on 2005 levels by 2030, as part of the European Commission's Climate and Energy Package to tackle climate change.   The carbon tax was introduced in 2010 as part of an overarching energy strategy and is a key tool to reduce emissions towards meeting these and other climate change commitments.

While Carbon Tax was introduced in Budget 2010 its application to solid fuels, including peat briquettes, was delayed to allow for the development of a robust mechanism to counter the large scale sourcing of coal from Northern Ireland where lower sulphur standards apply. Such a mechanism is in place since June 2011.

The carbon tax was introduced to solid fuels on a phased basis, initially at €10 per tonne of CO2 emissions from 1st May 2013 and subsequently at €20 per tonne of CO2 emissions from 1st May 2014, thus bringing the carbon tax on solid fuels in line with that on all other fossil fuels at €20 per tonne of CO2 emissions.

While tax increases are unpopular, it makes sense to increase taxes in areas where some benefits can arise, in this instance a carbon tax promotes energy efficiency, reduces emissions and reduces our dependence on imported fossil fuels.

As a matter of principle the reliefs from the carbon tax are limited to ensure as wide an application as possible.  Placing a carbon tax on solid fuels also offers an opportunity to develop cleaner more efficient and environmentally friendly alternative fuels.

To complement the introduction of the carbon tax, especially for those at risk of fuel poverty, the Sustainable Energy Authority of Ireland provide a number of fiscal supports to energy users.  The Better Energy Homes programme provides grants, over €200m to date, to assist homeowners improve the energy performance of their houses while the Better Energy Warmer Homes funds energy efficiency improvements in the homes of the elderly and vulnerable, making the homes more comfortable, healthier and more cost-effective to run.

In Finance Act (No. 2) 2013 Minister Noonan, legislated for the introduction of relief's from carbon tax for solid fuels which contain a certain proportion of biomass.  Last November this relief was commenced which exempts the biomass element of the solid fuel from carbon tax and I understand that Bord na Móna is currently in the process of developing such a fuel which should result in a cheaper more sustainable fuel which is better for the environment.

As the Programme for Partnership Government states, climate change is the global challenge of our generation and work is ongoing in all Government Departments towards developing and implementing Ireland's first National Mitigation Plan which aims to deliver a pathway enabling transition to a low carbon, climate-resilient and environmentally sustainable economy by 2050.   The draft National Mitigation Plan is open for public consultation and is published on the Department of Communications, Climate Action and Environment website with submissions invited from interested parties by the 23rd April.

A key part of developing the National Mitigation Plan has been the preparation of robust technical, environmental and economic analysis to evaluate the impacts of a range of different climate change mitigation options.  The carbon tax is, and will continue to be, a fundamental pillar of the transition towards a decarbonised economy and society by 2050.

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