Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is recognised that the transition to alternatively-fuelled vehicles is a significant challenge for the road haulage sector. The movement of goods by road remains the second biggest source of transport emissions after private car use.

At an EU level, the critical need to reduce emissions from transport has led to agreement on implementing increasingly stringent emissions standards for new heavy goods vehicles, together with a broad policy shift away from supporting conventional diesel and petrol technologies. As part of the transition to EU climate neutrality by 2050, green deal policy objectives include phasing out fossil fuels and transitioning transport to zero or low-emitting alternative vehicle technologies.

At a national level, the transition to low-carbon fuel technologies is not expected to be uniform across the entirety of the Irish freight and haulage sector. It includes the use of electric vehicles in the light commercial vehicle sector and a range of alternative fuel technologies in the heavy duty sector.

In this respect, the Finance Act 2018 introduced an accelerated capital allowance scheme for capital expenditure on gas propelled vehicles and refuelling equipment used for the purposes of carrying on a trade. The scheme allows taxpayers to deduct the full cost of expenditure on qualifying vehicles and refuelling equipment in year one as compared to the normal writing-down period of eight years, thereby providing a cashflow benefit to the sector.

Compressed natural gas offers far greater carbon reduction potential than diesel or petrol in heavy goods vehicles. The introduction of this scheme contributes to the work of the Department's task force on low-emission vehicles, and to achieving our national target to transition to a low-carbon economy.

The scheme is currently scheduled to cease on 31 December 2021. Therefore, next year my officials will conduct a tax expenditure review of the scheme. The review will evaluate the effectiveness of the scheme and make recommendations for its amendment and-or extension.

As the work is already scheduled to take place next year I, therefore, cannot accept the amendment. I want to reaffirm what I said to the committee about the work that is under way, by the Department of Transport, on a grant to support this sector in transitioning towards different kinds of engines because we realise that this is a challenge for a sector that must face other challenges at the same time. I am sure that there will be an opportunity to get the views of the Deputies on the issue of the grant, its design and roll-out, in different ways in the coming months.

As I said yesterday, I will see if it is possible to get a little bit more information on the work that is under way on that and will share it with the Deputies on Report Stage.