Dick Roche (Wicklow, Fianna Fail)

A great deal has been said about the transport sector, which is a very heavy producer of emissions. A key point that is often overlooked in debates of this nature is that the UN's greenhouse gas accounting rules mean that fuel — petrol and diesel — that is purchased by motorists and hauliers in this State, but consumed elsewhere, must be recorded in Ireland's greenhouse gas inventory. I do not know why that point has not come to the fore. Such fuel purchases — this phenomenon is sometimes referred to as "fuel tourism" — were estimated to have accounted for 2.4 million tonnes of Ireland's greenhouse gas emissions in 2005. That is the equivalent of two thirds of the Government's annual purchasing requirement of 3.6 million tonnes.

The revenue that is raised from excise and VAT on the sale of such fuel amounts to approximately €370 million per year. Members will be aware that the total amount allocated in the recent budget to meet the Government's allowance-purchasing costs was €270 million. That cost is more than offset by the receipts from fuel tourism. I make that point in response to those who have argued that the Government's actions in this regard are equivalent to picking up a tax cost. We have to take a more balanced view. I do not deny that arguments can be made on all sides of this debate. I am simply saying that we need to strike the kind of balance that has been suggested by a number of Members.

The European Commission supports the expansion of emissions trading to a global level, which was recommended in the Stern report. This effective instrument is consistent with the principles which underpin the Kyoto Protocol. I do not doubt that emissions trading will continue be a key feature of the international climate change regime. Deputy Cuffe has acknowledged on a number of occasions that the flexible mechanisms which are provided for in the Kyoto Protocol, particularly the clean development mechanism, are important not only to developed nations but also to developing countries because they attract significant investment in modern clean technology. This aspect of the debate was evident at the recent meeting in Nairobi of the parties to the Kyoto Protocol. The flexible mechanisms are important for investing countries as well as the countries where the investment is made.

Ireland's greenhouse gas emissions, as a proportion of all global emissions, account for less than the equivalent of 30 seconds. If we closed down the entire Irish economy, we would cause a great deal of hardship on this island but the global impact would be negligible. We must accept that economic and social problems would arise if we decided not to buy credits to supplement our domestic action aimed at meeting our Kyoto Protocol commitments. Other countries with strong environmental commitments, such as Denmark and the Netherlands, have had well-developed purchasing programmes in place for a number of years. The alternative for Ireland, which is to force industry or the domestic sector to carry the full burden, would have severe consequences. It would become even more costly to locate business and jobs in Ireland, the cost base of all industries would rise, electricity prices would be inflated and domestic producers would face undercutting from imports. Who would benefit from undermining companies and jobs in Ireland, which would be the precise consequence of the excessively rigid ideological approach that is being advocated by some people?

We do not have to choose between meeting our Kyoto Protocol targets and maintaining economic competitiveness and growth — we can and should do both. We have a moral responsibility to meet our Kyoto Protocol targets and we have a national responsibility to maintain economic competitiveness and growth. That point was made by Sir Nicholas Stern in his often quoted, but, I suspect, seldom read, report. The obvious benefits of a shift to a low-carbon economy would include significantly lower energy costs and major gains in efficiency. We all agree with the suggestion in the report that substantial opportunities would accrue from a shift to a low-carbon economy. That argument is based on a great deal of logic. The report states that "markets for low-carbon technologies will be worth at least $500 billion, and perhaps much more, by 2050".

Ireland has a proven track record of decoupling greenhouse gas emissions from economic growth. In 2004, the last year for which figures are available, national emissions were 23% above their 1990 levels. Our economy grew by 150% in the same time. There are many more cars, houses and jobs in the country than there were in 1990. There has been significant growth in industries which are emitters. I will spell out clearly the Government's position in case it is not understood. Ireland will comply with its Kyoto Protocol targets sensibly and honestly, without compromising economic growth or jobs. It will adopt a sensible approach that is fully consistent with the Kyoto Protocol.

The Government has capped the State's purchasing requirement at 3.6 million allowances per annum, or 18 million allowances in total over the five years between 2008 and 2012. Incidentally, if one does some calculations, one will probably find that the allowances to be purchased by Ireland over that period, as a proportion of all global greenhouse gas emissions, account for less than the equivalent of one second. The announcement in the budget that €270 million will be provided between now and 2013 sets out a definite financial basis for purchasing. It will build on the money that was provided by the Minister for Finance in 2006. In addition to providing financial resources, it is essential to put in place appropriate institutional arrangements for the purchase of carbon credits by the State. The Bill before the House designates the National Treasury Management Agency as the purchasing agent for the State.

I will outline briefly some of the main provisions of the Bill. Section 1 provides for the definitions in the Bill, which are quite straightforward. Section 2 addresses the main functions of the Bill. It establishes the carbon fund, gives control and management of the fund to the Minister for the Environment, Heritage and Local Government and delegates the management of the fund to the National Treasury Management Agency. The purchase of Kyoto units by the agency will be guided by certain principles. The units will have to contribute to the ultimate objective of the UN Framework Convention on Climate Change. There will be no investment in projects related to nuclear power. The investment risk will be minimised, particularly in respect of the timely delivery of credits. Good value for money will be obtained. Section 2 also provides that the Minister for the Environment, Heritage and Local Government may, following consultation with the Minister for Finance, direct the agency to purchase Kyoto units on foot of an agreement between the Government and other sovereign parties, or to dispose of Kyoto units if the amount held is surplus to requirements. The reference to the Government and other sovereign parties is important because government-to-government trading is the most ethical and economical way of proceeding in this respect.

Section 3 provides for the funding that will be required for the acquisition of Kyoto units. This provision enables the National Treasury Management Agency to draw funds directly from the Central Fund on an ongoing basis as needs arise. Sections 5, 6 and 7 provide for the provision of proper accounts by the agency in managing the carbon fund, the audit of the accounts by the Comptroller and Auditor General and the accountability of the agency to the Committee of Public Accounts. The agency will also be required to provide the Minister of the day with an annual report of its activities in managing the carbon fund. The Minister will lay such a report before the Houses of the Oireachtas. There will be full democratic accountability in the process. Section 8 provides that the Minister may revoke some or all of the functions assigned under the Bill to the National Treasury Management Agency, following consultation with the Minister for Finance.

The House will be aware that the European Commission recently made a decision on Ireland's national allocation plan for emissions trading between 2008 and 2012. I realise that this has been a busy period for Members and, therefore, they might not have had an opportunity to consider fully the contents of the Commission's report. There were some interesting points in the Commission's adjudication. It took the view that Ireland has not shown sufficient progress on the purchase of Kyoto units to supplement domestic emission reductions. That observation belies the suggestion that a negative view of carbon credits is taken in Europe or elsewhere — that is simply not the case.

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