Mr. Derek Moran:

I am pleased to have the opportunity to participate in the discussion. I will keep my opening comments brief.

The recent report published by the UN's Intergovernmental Panel on Climate Change, IPCC, highlighted the magnitude of the global challenge. Addressing the threat of climate change is a priority for Government as is reflected in the programme for Government. It is a whole-of-government issue that requires joined-up effort.

In her introduction to the Citizens' Assembly's third report, the chairperson acknowledged the topic of climate change is "incredibly broad, wide-ranging and affects us all in one way or another". There is no single solution to addressing the challenge of climate change and a collaborative effort is required across Government involving a range of inter-related actions and actors. A targeted balance between Exchequer-supported expenditure, taxation policies and regulation are necessary to deliver upon our climate change objectives.

Tax policy has an important role to play in contributing to our decarbonisation objective but the complexity and need for balance in policy actions was recognised in the assembly’s recommendations. The qualification of recommendation No. 3 on taxes on carbon intensive activities referred to the need to protect the poorest households and a recognition, in ancillary recommendation No. 3, that the impact of the agriculture sector on the economy, particularly the rural economy, has to be taken account of in transitioning that sector towards models of production.

Taxation and pricing is a significant aspect of the contribution the Department can make in this regard. Other issues include our ongoing work with our agencies such as the launch of Ireland’s sovereign green bond, Ireland Strategic Investment Fund, ISIF, investment supporting green technology and the promotion of the sustainable and green finance sector as part of the work under IFS 2020.

Our existing taxation system is positively contributing to climate change. The extent to which it can, and should, do more is a matter of ongoing policy discussion. Recommendation No. 3 highlights an acceptance of paying higher taxes on carbon intensive activities, subject to the qualifications such as the spending of the increased revenue on measures to support the low-carbon transition. The Government is committed, in the national mitigation plan, to carbon pricing as a part of the suite of policy measures to address and reduce greenhouse gas emissions over time. However, we also need to understand its impact on low-income households, on households for whom at present there is no realistic substitute to the consumption of carbon commodities for home heat and transport. The assembly recognised this challenge for poorer households in its qualifications to the recommendation.

Understanding the impact of carbon pricing on emissions is imperative. In this regard, the Department has worked with the ESRI and published a report in October 2018 that provides a better understanding of the environmental, social and economic impacts of increasing carbon tax rates. It found that a doubling in carbon tax to €40 per tonne would result in less than a 5% decrease in greenhouse gas emissions, which is a positive impact from just one measure. While this would be a positive contribution to our objective, it also underlines the importance of pursuing complementary policy levers in conjunction with taxation policy to support our transition to a low-carbon economy.

To build on this work, the ESRI is currently developing a multi-annual model to better inform our decision-making into the future which will be capable of modelling a carbon tax pathway which captures behavioural change on the part of producers and households alike in response to policy initiatives such as a phased increase in carbon tax rates over time. On budget day the Government reaffirmed the intention to put in place a long-term trajectory for carbon tax increases out to 2030 in line with the recommendations of the Climate Change Advisory Council, CCAC, and this committee. This is an explicit acknowledgement that carbon pricing and carbon tax, in particular, has a key role to play in the transition to a low-carbon economy.

In recommendation No. 9 of the report, the vast majority of members of the assembly recommended the State should immediately take steps to support the transition to electric vehicles. To support the achievement of this goal, a number of tax incentives are in place to encourage the uptake of electric vehicles, EVs, and more carbon-efficient vehicles. For example, in addition to the vehicle registration tax, VRT, relief of up to €5,000 and the Sustainable Energy Authority of Ireland, SEAI, purchase grant of up to €5,000, which are in place, a 0% rate of benefit-in-kind, BIK, on EVs was introduced this year. A new accelerated capital allowances scheme for gas-propelled vehicles and refuelling equipment is being provided for in Finance Bill 2018, designed to encourage the uptake of gas-propelled commercial vehicles as an economic and environmentally friendly alternative to diesel. Ireland's CO2 based VRT and motor tax have been redesigned towards incentivising the uptake of lower emissions technology, whereby the higher the emissions, the higher the tax. This charging system was introduced in 2008. In January 2013, a revised banding structure was also introduced for both motor tax and VRT to take account of technological differences. A zero emissions band for electric vehicles was also introduced for motor tax purposes. The introduction of these measures has been effective in influencing purchasing decisions in favour of more fuel efficient vehicles, with a significant increase in new vehicle purchases in the lower band categories. In 2009, only 13% of vehicles registered were in the 0g to 120g band; it has not increased to 77%. From virtually none, there are now approximately 4,000 electric vehicles on Irish roads.

The launch of Ireland’s first sovereign green bond for €3 billion by the National Treasury Management Agency, NTMA, on 10 October is a significant development, as it will assist in funding the Exchequer investment committed. While the proceeds of the bond are remitted like all other issues to the central fund, the yields will be channelled to projects with environmental benefits. Eligible green project categories for the first Irish green bond issue include sustainable water and waste management, clean transportation, environmentally sustainable management of living natural resources and land use, renewable energy, energy efficiency and climate change adaptation projects. The issuance of the bond was met with strong demand with a total order book of more than €11 billion.

With regard to the imperative of mobilising private sector capital, I note the important work of IFS2020, which has included green and sustainable finance as a strategic priority in the 2018 action plan. Last week, Sustainable Nation Ireland, which has a role under the IFS2020 strategy to support and promote Ireland as a green and sustainable finance hub, co-hosted this year’s EU annual climate innovation summit. The summit was held on 6 to 8 November and attended by more than 600 decision-makers from Ireland and Europe.

Officials from the Department have also worked closely with Deputy Pringle on the Fossil Fuel Divestment Bill 2016, which was passed by the Dáil in July and which I believe is before the Seanad this week. The Bill requires the NTMA, as custodian of the ISIF, to endeavour to ensure it does not directly invest in a fossil fuel undertaking and to divest from an investment which is or becomes a fossil fuel undertaking.

At a micro level but in keeping with recommendation No. 2 of the report on retrofitting and regeneration of public buildings, the recent renovation of the Department's offices in Government Buildings has resulted in annual electricity bill savings in the region of €60,000 per annum. In this redevelopment we were aware of the need to significantly reduce our energy footprint.

I again thank the committee for the opportunity to discuss the report and recommendations of the Citizens' Assembly, which is an important aspect of the national dialogue on climate action. Progress is being made, but we still have a long way to go with significant challenges ahead.