Professor Frank Convery:

We have just finished our Presidency of the Council of the European Union and I am proud to say our efforts at European level on the climate change agenda have been extremely positive. We do not give ourselves credit for it or structure it such that we receive credit. As I said before, there are two big pieces to the European jigsaw.

The trading scheme is struggling because of the collapse in prices. It is important for us to show leadership and provide support in improving and correcting this problem and to be seen to be doing so. It has no huge implications locally, but it does have massive implications internationally. Helping Europe to protect this policy instrument is very important.

With regard to the non-traded side, I agree completely that meeting our European targets is critical because we will have no credibility in Europe if we do not do so. There is an out in the legislation, whereby the Government could buy allowances from other countries to meet our obligations. By doing so we could meet the legal requirement, but we would be completely inconsistent with the spirit of the law. Meeting the obligations we already have in the non-trading sectors is hugely demanding, which is why I do not believe we should layer another domestic target on top of it. We will be pushed to the pin of our collar to meet what we need to meet.

With regard to institutional arrangements, the involvement of the Taoiseach is critical. We need a Cabinet-level committee chaired by the Taoiseach to seriously track this business. Having for the first time in legislation a requirement that each sector perform is an innovation. They must answer to the committee, the Oireachtas and their peers. I believe this is new. The committee or group being discussed will help people to speak to each other.

As a wider thought, I do not believe public servants should be promoted unless they have demonstrated during their career a serious ability to reach out from their own silo and work effectively with others. Existing incentives in the public service do not support civil servants who push out the boat and reach across. It is much safer to stick to one's own silo. This is outside the committee's brief, but the promotions system must actively encourage this type of activity. University people respond immediately when one states that unless they publish, they will not be promoted, and the next year everybody publishes. That is the way the world works. We need to think this through.

The climate change agenda needs an innovation strategy and it must be front and centre. It must involve the key stakeholders. We must get the message across to the business community and those on the ground such as farmers and those involved in transport that we must do new and different things and learn to take risks and do a few things which will not work. This needs to be embedded.

This year the carbon tax will bring in approximately €344 million. It is quite significant, in that if we did not have it and had to raise the same amount from income tax, we would have to increase income tax by approximately 2.5%. It plays quite a role at the macroeconomic level in not requiring us to increase taxes on labour. The suggestion of using some of the money to support the carbon reduction agenda contains much logic. As we all know the Department of Finance goes ballistic at the very mention of ring-fencing, a more nuanced parallel approach is required. It raises approximately €100 million for every €5 it is increased; therefore, an increase would bring in approximately €70 million or €80 million extra. If we were to take this route, we would definitely have to suggest putting €50 million towards the carbon agenda. The logic is very strong of having collateral investment in greenhouse gas abatement and energy efficiency measures when we get out of this economic mess.