The Government's announcement last Friday that it has abandoned its plans to introduce a new carbon tax came as a surprise. There was a firm commitment to introduce such a tax as part of the National Climate Change Strategy and the Minister for Finance, Mr McCreevy, had said it would be introduced next January.
The recent rise in fuel prices had led to some speculation that the Government might postpone the introduction of the tax, or come up with a plan to phase it in over a prolonged period. Instead, it appears that the idea of a carbon tax is now dead, at least during the term of the current Government.
There were legitimate questions about the way the tax would operate and the burden it would impose on fuel users. Clearly, ministers felt that the tax would be unpopular and feared that its contribution to meeting our emissions targets would be limited enough. However the fact remains that the tax was a central part of the Government's strategy to meet our commitments under the Kyoto Protocol to reduce greenhouse gas emissions. By abandoning it, the Government has raised serious questions about its commitment to Kyoto.
There is now an urgent need for the Government to clarify how it will meet - or even move towards - the targets set down by the agreement and what it sees as the likely cost if we do not. Friday's press statement said that it remained committed to meeting its target under the Kyoto agreement, but was far from clear on how this would be done. Some of the dire warnings about the huge cost to the Exchequer of not meeting the targets appear to be overdone, but the Government needs to outline its assessment in this area and make clear its plans to operate within the emissions trading system, due to come into force next year. Under this system countries - and large companies - will have to purchase the right to exceed emissions targets from other users.
Ireland signed up to Kyoto six years ago, but the target of reducing emissions to 13 per cent above their 1990 levels between 2008-2012 will not now be met. The rapid growth in the economy in the meantime has contributed, of course - but so has the lack of a Government strategy. ESB production, for example, remains heavily reliant on a coal-fired plant in Moneypoint and public transport alternatives to the private motorists such as LUAS have been slow to come on stream. Pursuing environmental goals does not mean abandoning the promotion of economic growth. However a clear strategy is needed on how the two goals will be balanced. In our move to an affluent society, we have clearly still not developed such a plan.