Liz McManus (Wicklow, Labour)

While I cannot support this Private Members' motion, I welcome the debate. The issue under scrutiny relates to energy policy and economic policy, both of which are centre stage in the public sphere at present.

It would not be generally known that the carbon allowance scheme which is designed to cut carbon emissions has actually created an anomalous situation whereby companies make a profit while consumers pay the price for a scheme determined at EU level. The current arrangement, which means that the ESB and other power generators have free carbon allowances, is a temporary one but the regulator's requirement to ensure the carbon cost in consumer charges is not. It has led to increases in charges for electricity and these look set to rise again.

A new regime in regard to carbon allowances will come into force in 2012, that is, in four years' time. From 2012 new targets will apply and carbon allowances will be auctioned. For companies that cannot, or will not, reduce carbon emissions, the costs will be sizeable. Those costs will be passed onto the customer and unless there is a real determination to tackle carbon emissions in the meantime, that cost will be penal.

We already know that a 15% increase is being sought by the ESB, Bord Gáis is seeking up to 20% and petrol and diesel continue to increase in cost, so the focus on the windfall gain, even if it is short-term, is timely. We should look long and hard at how best to utilise this funding which accumulates to €1.6 billion over the four year period. I am not impressed by the vague statement in the Government's amendment that "this issue is subject to ongoing examination by the Department of Finance and the Department of Communications, Energy and Natural Resources". I would prefer if the Government, instead of fobbing off the motion with this kind of cotton wool, were to look seriously and rigorously at the potential value of the windfall gain.

I urge that this potential be opened up, as is proposed in this motion. However, I do not believe that dissipating the windfall gain as proposed by Fine Gael is the way to go. It may be a popular move to reduce the lower rate of VAT from 13.5% to 12.5 % but it is not a prudent one. After all, there is no guarantee that consumers would see the benefits. More importantly, such a proposed use of the fund would not deal with the two overriding concerns that should determine Government energy policy, the first of which is climate change.

Power generation offers us significant opportunities as a country to meet our CO2 targets. Over the past ten years the Government has failed abysmally to tackle climate change. Far from reducing, our emissions are still rising well beyond the targets already set. The challenge into the future, as the EU sets the bar higher and as the threat of global warming increases, will become more urgent for us all. The EU requirement of a 20% reduction by 2020 may well rise to 30% if negotiations at global level are successful.

We must all face this new reality and it is not a pretty sight. Ireland currently is the fifth highest emitter of CO2 per capita in the world. Over the past 10 years the Government record is awful. On energy security, we have the third highest level of oil imports in the EU at 87%. It is very difficult to see how Ireland can meet these challenges of climate change and energy security and yet, at the same time, we have simply no choice in the matter. We will have to do so and a sea change must occur across all sectors.

In the non-trading sector the big offenders, agriculture and transport, cows and cars, happen to also be the most intractable when it comes to reducing CO2 emissions. Therefore, much rides on transforming our energy production. The vast natural resources we enjoy of wind, wave and tide are good news for us but that full potential has yet to be fully exploited. Also welcome is the ESB's €22 billion strategic framework which aims to halve its carbon emissions within 12 years and achieve carbon net-zero by 2035.

Infrastructural development on a major scale is required and this windfall gain should be earmarked to fast-track the development of renewables in the electricity sector. I recommend that the windfall gain be put into a carbon fund for that specific purpose. Such investment would mean that the move towards renewables would, at the end of the day, ease costs for the consumers but it would also mean that we, as a country, would have a better chance of meeting our EU and Kyoto targets.

The other great challenge is for those changes to apply evenly and fairly. The issue of fuel poverty is real and pressing. This winter, there will be low income families and old age pensioners who are simply not able to keep warm because of rising energy costs. I listened in disbelief to the Minister for Communications, Energy and Natural Resources when he replied to my concerns on this issue. In this House last week, he effectively gave a sermon about how we all had to tighten our belts and face reality. When it comes to rising costs of energy, the Minister for Finance dismisses these concerns and calls people whingers.

I remind both these Ministers that this wealthy island we all share has one of the highest levels of excessive winter mortality in Europe. An estimated 2,800 excess deaths occur here over the winter months. Let us remember we are talking mainly about frail, elderly people. In Northern Ireland, which is ahead of us, a fuel poverty strategy is in place to tackle what is a scandal. In the Republic, however, there is no fuel poverty strategy or even the promise of one. In fact, disgracefully, only 4% of the energy budget is spent on improving low income homes. The windfall gain could and should be used to protect those on low incomes from the steep increases that may be inevitable. There is no argument in terms of the cost of energy but the increases must not impose an undue burden on those who are least able to afford them.

We are witnessing great changes in the area of energy. This morning, the Joint Committee on Communications, Energy and Natural Resources heard a presentation on the east-west connector. That is a wonderful project and I hope the Government will ensure funding is provided, although I do not think anybody expects the commitment on NDP funding to be met. We want that project to proceed but it is possible that people will have to pay for the connector through an extra tariff on their electricity bills.

I appreciate the thinking behind this Fine Gael motion but, regrettably, the Labour Party will not be supporting it because of the second section of the motion.

See this speech in context