Derek Nolan (Galway West, Labour)
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The carbon tax was introduced in 2010 as a very important element of our climate change strategy. The rate of tax with effect from 1 May 2013 is based on a €10 charge for CO2 and will increase to €20 per tonne with effect from 1 May 2014. This will have a particular impact on people who use solid fuel. Leaving aside large industry, businesses and SMEs who may be able to absorb costs even though that is not even said, it will translate into a very tangible price increase of €1.20 on a bag of coal and 26 cent on a bale of briquettes. This will be a doubling of that charge on those products compared to the year before so we are talking about €2.40 on a bag of coal. One is talking about possibly two to three bags of coal per week for people who use coal as the main fuel to heat their homes, for example, pensioners who have to keep the range on to keep warm. That is €7 and if one puts that out over a year, one is talking about a significant amount of money from people who are very challenged financially at the moment. It is not a luxury. It is not like we are talking about incentivising and different emissions or that there are other products they can use. If one has a range in one's house or a fire one uses to heat the home, coal is what one uses. Unless we are going to give people grants to change their method of heating their homes completely, which I do not think is on the cards, this is simply a punitive tax on people who really cannot afford it.

I know we have obligations in this regard but what I am asking for is that we delay it. We are finally starting to see this little bit of hope in the economy. People are getting back to work. It is not there fully and we are not realising it in people's pockets. There is a case to be made to delay the implementation of this tax to keep the bag of coal at its current price. It is not fair to have a €1.20 increase last year and another one this year so suddenly when we have not seen the impact of that bit of hope in the economy on people's pockets. I am asking that the Department consider the cost and delay it for another year.

Brian Hayes (Dublin South West, Fine Gael)
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I thank my colleagues for raising this important issue. I have been asked by the Minister for Finance, Deputy Noonan, to respond.

The Minister provided for the application of a carbon tax to solid fuels in budget 2013. In order to lessen the potential impact on lower income households, he chose not to introduce it until after the 2012-13 winter period and opted to introduce the tax in two phases, that is, €10 per tonne of CO2 from 1 May 2013 and a further €10 per tonne from 1 May 2014, thus bringing the carbon tax on solid fuels in line with that on all other fossil fuels, namely, €20 per tonne of CO2. The net effect of the €10 carbon tax from 1 May 2014 will be approximately €1.20 on a 40 kg bag of coal and 26 cent on a bale of briquettes.

Deputies will be aware that the application of the carbon tax to solid fuels remained subject to a ministerial commencement order dating back to 2010. This approach was primarily adopted to delay the application of the carbon tax to solid fuel in the residential sector so as 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. The Department of the Environment, Community and Local Government undertook to provide such a robust mechanism in conjunction with the National Standards Authority of Ireland, NSAI. As part of that exercise, the Department, in conjunction with the NSAI, consulted with a stakeholder working group that included officials from the Department of Finance, the Revenue Commissioners, the industry representative - the Solid Fuel Trade Group, SFTG - the Environmental Protection Agency, EPA, and representatives of selected local authorities. Such a mechanism has been in place since June 2011. The application of the carbon tax to solid fuels was further postponed in 2012, given the overall tax increases in budget 2012, including in the standard rate of VAT.

The introduction of carbon tax was about sending a price signal that there was a cost associated with the consumption of fossil fuels to the detriment of our environment. It should also be noted that solid fuels have the highest carbon content of all fossil fuels. As a result, they are considered the dirtiest fuels and, given the environmental impact, it is important that they be taxed accordingly.

In the context of domestic heating provision, the carbon tax is intended to apply to all types of coal and commercial peat. According to the ESRI, low-income households usually make extensive use of cheaper, but more carbon-intensive fuels such as coal and turf. The effect of the €10 per tonne of CO2 emissions from 1 May this year will result in an increase of €1.20 on a bag of coal and 26 cent on a bale of briquettes. The issue of fuel and energy poverty is being addressed through the energy affordability strategy, which aims to tackle energy affordability through a combination of institutional supports, investments in improving the energy efficiency of our housing stock and wide availability of advice on energy efficiency. In a decision of 14 September, the Government agreed to publish the strategy with a view to its full implementation.

While tax increases are always unpopular, where member states are under fiscal pressure 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 total dependence on imported fossil fuels. Accordingly, and unfortunately for the purposes of this debate, the Minister does not intend to defer the further increase of €10 per tonne of CO2 emissions from 1 May.

Derek Nolan (Galway West, Labour)
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When I return to Galway this evening and speak with people who are worried about this issue, I will give them some details of the Minister of State's answer. They will get the contradiction quickly. The Government decided in September to publish a strategy to deal with energy affordability with a view towards its implementation. That strategy is still being implemented, yet we are moving ahead with a punitive increase in the cost of people's fuel. There is a contradiction in that strategy versus €1.20 extra on a bag of coal.

I realise that the Minister of State is not the Minister for Finance, but will he ask the Minister to produce information on how much revenue will be generated this year by that tax and to reconsider the possibility of delaying its introduction by just another year to give the economy a little bit of a chance to pick up and to give people a bit of slack and breathing space? Otherwise, a €2.40 tax on a bag of coal will be applied within the space of one year. For the people under discussion and who we are trying to represent, that is a great deal of money.

Brian Hayes (Dublin South West, Fine Gael)
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I do not want to give anyone a false impression of the Minister's position, as he is clear on this - the budget is set for this year. Deferring this tax would effectively change a budget that had already passed through the Houses. I appreciate the points raised by the Deputies. The same have been raised in my constituency. This tax is difficult for people. One of the Minister's reasons for choosing to increase the tax on 1 May was that the winter months would be behind us and we would have some time to get ready for the next winter period. We held a good debate on this matter in the context of the Finance Bill.

I managed to get some information from other Departments in preparation for this debate, as the strategy on warmer homes is cross-departmental. The State has already invested significant funds in this regard. For instance, the national fuel scheme is a direct subsidy to the poorest homes and effectively amounts to €20 per week household supplement. More than €280 million is spent on it. This is rightly welcome, given the difficulties posed by fuel poverty, which is an issue for people with little income.

On 18 February, my colleague, the Minister of State, Deputy Jan O'Sullivan, announced a significant retrofitting programme for local authority housing amounting to more than €30 million this year. This will make a considerable difference. This year's spend on the energy efficiency upgrade is €57 million. I also understand that a total of 105,000 homes have benefited in recent years from retrofits under better energy awareness housing schemes.

We will solve this problem by improving thermal efficiency, particularly in poorer households. The Government is committed to doing this and is rolling out a substantial investment programme. We need to continue this initiative.