The Minister for Finance, Mr McCreevy, has invited submissions from interested parties on the Coalition Government's commitment to introduce a carbon tax, designed to reduce the level of greenhouse gas emissions.
The long delay in acting on obligations the Government undertook in 1998, under the UN Kyoto protocol on global warming, is likely to make the change more onerous. And it may not save the State from heavy financial penalties for failing to meet its undertakings. The tax is not due to take effect until 2005.
Already, the Tánaiste and Minister for Enterprise, Trade and Employment, Ms Harney, has insisted that a carbon tax cannot be allowed to damage industry's ability to compete internationally. Multinational corporations with high energy needs have warned of job losses. And representatives of the motor industry have accused the Government of using the environment "as an excuse for revenue generation".
In spite of such special pleadings, action is urgently required if Ireland is to reverse its present profligate use of fuels with a high carbon content. We rank fifth in the world as dirty energy users, with per-capita carbon emissions of 17.7 tonnes a year, compared with the EU average of 10 tonnes.
Agriculture is the main producer of carbon emissions, at 30 per cent; followed by power-generating stations at 25 per cent; transport at 14 per cent; homes at 11 per cent; and industry at 7 per cent. A reduction in the national herd of 5 per cent, which may well happen under CAP reforms, would meet our requirements in that area. An increase in forest planting and the purchase of emission allowances from other compliant countries would allow the Government discretion in helping the high energy- use sector. Stricter building regulations and more efficient industry practices would help. But the basic requirement to reduce carbon emissions will remain. And that can only be done through a graded tax system on the most polluting fuels.
A study conducted last year by the Economic and Social Research Institute found the economic impact of a carbon tax could be offset if the money raised was used to cut income tax. It established that poorer households would suffer most from any new charges. And it estimated that nearly one-quarter of the revenue raised would be required to negative the effect on poorer families through welfare system increases. A carbon tax is required if Ireland is to meet its obligations under the Kyoto protocol. But the least well-off sections of society should not be expected to carry the can.