Professor Edgar Morgenroth:

I thank the Deputy for the compliment. If it stimulated some thought, that was very much what we tried to do with the report. The Deputy is quite right in saying that we focused on CO2 emissions. The way the tax system was changed at the time - it was not only the excise duty as the Deputy rightly pointed out - generated reduced CO2 emissions but we did not think about the other emissions. We know at this stage that the other emissions are pretty important. It is probably a more important issue in some other jurisdictions where, for climatic reasons, the emissions of particulates cause a bigger problem. It is typically windy here and we are lucky to get rid of the emissions but, nevertheless, the concentrations when one measures them, particularly at peak traffic times, are significant and they have negative health consequences. We have this knowledge now and it would not be right to ignore that.

The Deputy asked what we would say to consumers who made a choice in good faith. I have to admit I drive a diesel car. If we consider it in terms of CO2 emissions, for certain types of drivers it continues to be the exact right choice because there is nothing better for them on the market. That was the point I made to Deputy Ryan, namely, that the industry also has to develop vehicles that suit all types of drivers in terms of journeys. Many of the electric and hybrid vehicles tend to be more suited to urban traffic. In Ireland we have much more cross-country traffic. Those things also need to happen.

I appreciate that the average diesel vehicle owner would not be happy to be facing higher taxes. There is no doubt about that. The question is what the right thing to do is in terms of measures and how quickly we want to do something about it. We took a very simple approach here. We simply said let us do an assimilation of changing the excise rate all at once. As a policymaker one might think a more gradual change might be more appropriate because there are other criteria one needs to be concerned about. We simply looked at only the environmental issues.

The impact of changing not resulting in a reduction in CO2 emissions as one might expect is something that is called the rebound effect in economics. We see that in many different areas. If people insulate their homes, they end up turning up the heat a little bit. They get some of the benefits through comfort in the end and they waste some of it. We find the same thing happens in this case. If one has a more efficient vehicle, one is more inclined to go a bit further, and that is what we have seen. It is not surprising that this has happened. It is a question of whether we will see a similar trend if we return to having more petrol-based vehicles. To answer the Deputy's question, that would probably end up with us having higher CO2 emissions. The idea would be to go from consumers moving from diesel to electric or hybrid vehicles and, it is hoped, not having higher CO2 emissions. It is a question of exactly how one structures the tax system to enable the right change to be made rather than going in the wrong direction.