The Oireachtas Committee on the Environment has backed proposals for the introduction of a carbon tax.
However, its members are concerned that any revenue raised from the tax should be fully recycled in the form of tax breaks and other payments to limit the overall financial impact on those most affected.
In a draft submission to the Department of Finance, which is considering whether to introduce the tax, the all-party committee has concluded that action was needed to reduce Ireland's greenhouse gas emissions, now the highest per capita in the EU.
The draft report was agreed yesterday and followed hearings last week at which the Committee heard evidence of experts from the ESRI and Department of the Environment.
In the draft report, the committee acknowledges that, according to Irish and European studies, a carbon tax will lead to a decrease in greenhouse gas emissions.
However it will not be sufficient to enable Ireland to reach its Kyoto target for emissions, and other measures, including new building regulations, will also be needed.
The committee believes the tax should be introduced on a phased basis.
It has also made strong recommendations that the Government does not exploit the proposed emissions trading system to meet its international agreements.
Under the trading system, Ireland and large companies and electricity producers will be able to buy extra capacity and exceed the annual limit of 60.9 million tonnes of emissions set for 2010.
Yesterday the committee agreed to a proposal by its chairman, Mr Seán Power, to submit the report - with some amendments - to the Department of Finance.
Members were concerned yesterday that revenue from the proposed tax, estimated to be over 500 million, be fully used in measures to help businesses and people affected by the tax.
They agreed to a number of small amendments to the report, to emphasise their concern that all of the money be used to reduce labour and VAT taxes on business.
Committee members were also concerned that people from poorer backgrounds, who rely on burning peat and coal for their heating, will be disproportionately affected by the tax.
Their report also advocates that revenues from any carbon tax also be used to fund increased social welfare payments, grants for new heating and insulation systems, and says lower tax rates in other areas are needed.