Dick Roche (Wicklow, Fianna Fail)

I move: "That the Bill be now read a Second Time."

The Government is committed to meeting Ireland's greenhouse gas emissions reduction target for the purpose of the Kyoto Protocol and we will do so in a manner which is logical and structured but without interfering in the growth and development of the nation. The fundamental elements of our strategy for meeting our target involve domestic emission reductions across the economy, participation by 109 Irish installations in the EU emissions trading scheme and the purchase of a limited number of carbon credits through the flexible mechanisms provided in the Kyoto Protocol.

The purchase of carbon credits is a legitimate, practical and logical option under the Kyoto Protocol. As well as being a key part of the Kyoto arrangements, carbon trading is endorsed in the Stern report and by the EU Commission and is central to virtually every member state's Kyoto programme, as well as being supported by the UN Secretary General, Kofi Annan, and Al Gore. However, the Irish debate on carbon credits regrettably has been polarised.

The participating states in Kyoto could have adopted a variety of approaches, such as the system suggested by Deputy Eamon Ryan for allocating every person on the planet a carbon ration, but did not do so on the grounds that they would create a massive global bureaucratic burden. Another such option was to place an absolute cap on carbon emissions, which would require every industry to cut emissions to a pre-determined figure. While this idea has clear merit, it also has cost implications which, in the Irish case, would be ruinous for many businesses.

The Kyoto parties could also have gone down the road of mandatory carbon taxes, as was proposed by the Green Party and more recently by Sinn Fein, but the economic and social disadvantages were seen as outweighing the practical benefits. Furthermore, the effect of carbon taxes is regarded as questionable. The increases in global oil prices over the past two years has not resulted in a significant decrease in transport emissions, while the increased fuel costs associated with a carbon tax would primarily affect vulnerable sections of the community. Over the past few weeks, various other solutions have been put forward, no doubt sincerely, in the House and in the Joint Committee on Environment and Local Government. There is merit to many of these but a judgment must be made on whether their costs outweigh their virtues.

In the debate at the joint committee on the emissions trading scheme, it was argued that the State should not buy credits because doing so would take the burden off polluting companies. This line of debate misses the point that the emissions trading system applies to 109 companies and places the specific burden on their shoulders of cutting annual emissions by 3 million tonnes.

What would be the consequence to Irish industry or foreign direct investment if this burden was to be significantly increased in the manner suggested by the Labour Party and the Green Party? What would be the effect on the cement industry, even if it is not our favourite industry? The damage, for example, to the cement plant in Deputy O'Dowd's constituency would be ruinous. As that Deputy has argued, a balance must be found.

Yesterday, I met representatives from the Irish pharmaceutical sector which, they said, directly employs 24,000 people and exports goods to the value of €40 billion, with a further 20,000 to 30,000 people employed related areas. The sector incurs significant energy costs and is part of the trading system, but it would face a perilous future if we were to introduce more restrictive measures. Who would explain to workers in Aughinish Alumina or small businesses that they are losing their jobs because our unnecessarily fundamentalist approach is driving up energy costs?

A report issued this week by Sustainable Energy Ireland suggested that emissions from the energy sector grew by 3.2%, while output grew by 3%, due to an increase in electricity generated by turf. In response, Deputy Gilmore has suggested that we should curtail peat extraction, stop using it as an energy source and conserve bogs.

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