John Gormley (Dublin South East, Green Party)

It recognises that the economy and the environment cannot be separated, and that the greatest risk to the economy is climate change.

This carbon budget will serve a number of purposes. It will integrate climate change considerations into the Government's budgetary policy, as they must be integrated into the decision-making process across all sectors of Government. It will be a clear measure of the progress made each year towards meeting our targets for emission reductions. It will help in our efforts to increase public understanding of climate change and the Government's response.

The concept of the carbon budget is new and this year's format can be seen as a pilot. I will consider how its content and format can be developed and improved in future years. The carbon budget process as it develops will be essential to achieving our greenhouse gas emissions goals. Climate change is a core consideration in Government policy-making. Therefore, it must be integrated into the annual budget process. We must reach a situation where our estimates of the carbon impact of the budget are as good as our estimates of the financial and economic impacts of the budget.

From now on, we must think differently — we must think carbon. Carbon must become the new global currency if we are to successfully tackle climate change and we must then de-carbonise society. We must put a price on carbon. I hope all Deputies in the House will begin to understand the necessity of introducing a carbon levy.

My statement today is accompanied by a short table, which has been circulated to Deputies, and which is the essence of the carbon budget. It presents an historical picture of Ireland's emissions trends to date and is forward-looking in that it shows how Ireland's emissions are expected to develop over the next five years. The table includes Ireland's emissions in 1990 and 2005, as well as provisional estimates from the EPA and SEI for 2006. These figures show some revisions for the years 1990 and 2005 compared to those published early this year due to ongoing improvements in the reporting systems. The provisional estimates are that total emissions in 2006 were just under 1% lower than in 2005, a welcome reduction following the previous year's increase.

Deputies should refer to the table and I will explain what it contains. The three key columns are identified as D, E and F. Column D shows projected emissions for the 2008-12 Kyoto Protocol period, taking account of measures included in the national climate change strategy published last April. Column E shows the effects of the additional measures we have put in place, including those in the budget. Column F updates projected emissions to take account of these measures. Column D shows that the combined effect of all measures quantified in the national climate change strategy was projected to reduce our net emissions to 66.2 million tonnes as a yearly average in the 2008-12 period. That is 3.2 million tonnes above our Kyoto Protocol target and would, therefore, have required the State to buy an average of 3.2 million carbon credits each year under the flexible mechanisms of the protocol, at an annual cost of anywhere between €30 million and €60 million, or possibly even more, depending on the terms which the NTMA is able to secure for its investments in relevant funds and projects.

That projection in the national climate change strategy of 66.2 million tonnes in the 2008-12 period is about 2.2 million tonnes above what is required to meet the programme for Government target of an average annual reduction of 3% in emissions. Deputies can see, from columns E and F, the effects of the further steps we are taking to deliver more reductions in emissions. These steps will get us closer to the 3% target and also reduce the amount we have to spend on carbon credits to comply with our Kyoto Protocol commitment.

I recognise, as Al Gore did when he was in Dublin last weekend, that the flexible mechanisms are an integral part of the Kyoto Protocol agreement and an important instrument in promoting low emissions investment in developing countries. Notwithstanding this, the Government is committed to ensuring Ireland is able to fulfil its commitments as much as possible by emission reductions through domestic action, reflecting our status as a developed nation with the resources, knowledge and political commitment to do so. If we can achieve the 3% annual reduction on average between now and 2012, we will need to purchase only 1 million carbon credits on average each year. Such a reduction is a big challenge but we are determined to meet it and the budget is a significant first step.

I will now provide a summary of new measures. The carbon budget table shows a preliminary indicative additional saving of 600,000 tonnes from measures announced since the publication of the national climate change strategy. These savings will be achieved due to additional savings by the emissions trading sector following the Commission's decision on Ireland's national allocation plan in July this year; additional measures included in the draft energy efficiency action plan, published by my colleague, the Minister for Communications, Energy and Natural Resources — these include the announcement yesterday by the Minister for Finance of funding for an initial pilot programme to encourage the owners of older housing stock to upgrade the energy performance of their homes; and additional funding for a further phase of the highly successful greener homes scheme. The new phase of the scheme which was launched in October will promote a new range of additional renewable technologies now ready for market and deliver almost double the emissions savings that will be achieved under the scheme.

The overall effect of all these additional measures is to deliver a total annual saving of 600,000 tonnes on average each year in the 2008-12 period, bringing projected annual net emissions down to 65.6 million tonnes. This has two important consequences. First, it reduces our reliance on purchasing credits by 600,000 tonnes per year which, in turn, means a significant saving to the Exchequer. Second, it brings us closer to meeting the 3% target for annual average domestic reductions. The gap to be bridged is reduced from 2.2 million tonnes to 1.6 million tonnes.

As well as these measures which are calculated to deliver additional emissions savings, I am taking steps to implement measures which will deliver savings already quantified in the climate change strategy, as follows. I am announcing major changes to the existing motor tax regime to accompany the VRT changes announced yesterday by the Minister for Finance. Under the new system, both taxation regimes will be based completely on the rated CO2 emissions from the vehicle in question. These changes will be accompanied by a new mandatory labelling system for cars based on emission levels which will be similar to the energy rating label in place for white goods. I will give details of the motor taxation changes later in this address. I will sign regulations by the end of this month to strengthen significantly the energy efficiency requirements for new homes to deliver energy and emissions savings of 40% on current standards. I will further strengthen building standards in 2010 to achieve a 60% improvement on current levels. It is my ambition eventually to achieve zero carbon emissions associated with new dwellings. I hope to do this by 2016.

As I said, this is a first step. Efforts to reduce Ireland's greenhouse gas emissions will be an ongoing and central feature of the work of the Government across every sector. For example, it is clear from the table that the transport sector has a critical role to play. Last year greenhouse gas emissions from transport increased by over 5%, indicating the scale of the challenge in the sector. Next year will see the publication of the sustainable travel and transport action plan which will provide the basis for radical change in that sector.

All my ministerial colleagues on the Cabinet committee on climate change and energy security are looking closely at what more can be done in the sectors for which they are responsible. To take just one example, from my own area, of the scope for further action, I am announcing today that I will develop a national energy efficiency standard for lightbulbs.

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