The chairman of the State energy agency, Sustainable Energy Ireland (SEI), has said that the Government seriously underestimated the likely reduction in greenhouse gases that a carbon tax would achieve when it decided to abandon plans for the tax earlier this year.
Prof Frank Convery, who is also an environmental economist at University College Dublin, said that SEI's detailed figures contradicted the Government's assessment of the potential impact of a carbon tax.
According to Prof Convery, SEI could secure reductions in greenhouse gas emissions of over three times the amount predicted by the Government had a carbon tax been introduced.
When the then minister for finance, Mr Charlie McCreevy, announced plans to abandon the tax, he said it "was going to be an enormous amount of bureaucracy for very little effect".
Figures were released which suggested that the tax would lead to a reduction of only 500,000 tonnes of carbon dioxide gas, the main contributor to global warming.
The figures also suggested there would have been a disproportionate effect on low-income households.
The figure of 500,000 is only a small proportion of the estimated 10 million-plus tonnes of greenhouse gases that Ireland has to eliminate each year to comply with the Kyoto agreement, which comes into effect from 2008.
However, according to Prof Convery, a pilot programme by the SEI involving industry suggested that reductions of 1.8 million tonnes could have been achieved through voluntary agreements with industry.
Firms would sign up to a three-year energy efficiency programme, under which they would be able to claim tax credits against their carbon tax bill, because of reductions in emission levels from their operations, if fully implemented.
SEI had a significant number of large, medium and small companies committed to the programme. A report by SEI estimated that the voluntary agreements would lead to emission reductions from the companies of up to 17 per cent over a three-year period, or 1.8 million tonnes.
SEI has now abandoned this voluntary programme and is implementing a new sustainable energy initiative, involving IBEC and other industry groups. It is hoped that recent rises in energy prices and the emissions trading scheme will encourage companies to become involved in the scheme. Prof Convery said that while he was hopeful for the new scheme, the abandonment of carbon taxes "has certainly made it more difficult for SEI to reach its objectives".
He said the Government's assessment was "too narrowly focused" and did not take into account the wider impact of a tax.
The tax would have operated as "a price signal" and would have had a much wider impact than the Government's figures suggested. It would have encouraged industries to focus on their energy use, as would have occurred in the SEI scheme. "I think it is a pity, it's a missed opportunity," he said.