Simon Coveney (Cork South Central, Fine Gael)

I wish to share time with Deputy Creed.

I have spoken on a number of occasions in the House in respect of this issue and, therefore, I do not wish to comment on the generalities of climate change. I will instead focus on the current EU climate-energy package. I understand the Minister for the Environment, Heritage and Local Government, Deputy Gormley, is in Brussels today to deal with this matter. I further understand that the Minister for Communications, Energy and Natural Resources, Deputy Ryan, will also be travelling to Brussels in the coming days to discuss the same issue.

The European Commission produced a climate-energy package at the beginning of this year. The aim of this package is to reduce the EU's dependence on fossil fuels — mainly gas, coal and oil — enhance the competitiveness of the European economy in general and, primarily, to reduce the Union's greenhouse gas emissions. A revised emissions trading system, ETS, within the EU and the new effort-sharing proposal specifically set out how the Union will achieve its independent target of reducing emissions to 20% below 1990 levels by 2020. Regardless of what the rest of the world is doing, this is a commitment we are making.

In order to achieve the reduction to which I refer, the EU, as a whole, must reduce 2005 emission levels by 14%. The latter will be achieved in two ways. First, within the ETS, energy and industrial emitters will be subject to an EU-wide cap, through a system of, depending on the circumstances, either allocating or auctioning carbon allowances. This will reduce emissions to 21% below 2005 levels by 2020. The second way in which the reduction will be achieved is through the effort-sharing proposals, Under these, member states will reduce the remaining non-traded sector emissions to 10% below 2005 levels by 2020. This will be further subdivided among member states in a range of either plus 20% or minus 20% compared to 2005 figures. The Commission has used GDP per capita as the basis for the effort-sharing targets allocated to each country.

The Commission's proposals sound complex but that is not the case. Put simply, large industrial concerns in Ireland — this applies to approximately 106 companies, many of which are energy generators and other major businesses — will be obliged to compete and survive within a trading environment under the ETS, where carbon will have a measurable value and where emissions allowances will have to be purchased on the open market through an auctioning system. The remainder of Ireland's emissions are the responsibility of the Government. These will have to be reduced to 20% below 2005 levels by 2020. That will be a significant task. The Government will be obliged to target transport, agriculture, small industry and households to achieve the reduction to which I refer.

The enormity of the task is becoming clearer to people as time passes. It will not be easy to achieve a 20% reduction in emissions by 2020, particularly when one considers that emissions from the traded sector are not included in our target. If the ESB was to reduce all of its energy emissions with immediate effect, this would have no impact with regard to the Government's responsibility to honour the commitment it made in respect of emissions reductions prior to 2020.

The EU climate change package is not a done deal. I wish to raise a number of concerns. The Government must outline to the House its priorities regarding any changes it wishes to make to the package. It must also ensure that there is far greater clarity in respect of the transition from the free allocation of allowances to an auctioning or purchasing system for such allowances. The latter will be applied differently to the energy and non-energy sectors. Those in the non-energy sector require clarity as to how, between 2012 and 2020, we are going to gradually introduce an auctioning system for them. Large emitters planning to invest millions or, potentially, billions in their operations require certainty in respect of this matter. The Government must give priority to providing such certainty.

The Minister of State, Deputy Hoctor, and the official from the Department will be familiar with issues such as carbon leakage, which is extremely important in the context of Irish and EU economic competitiveness, permeability between the traded and non-traded sectors, the vulnerability of agriculture and the importance of ensuring that forestry — in terms of its use as a carbon sink — is factored into the equation in respect of our emissions commitments.

See this speech in context