Éamon Ó Cuív (Galway West, Fianna Fail)

To date, I have received two representations on this issue – one was referred to my colleague, the Minister for Finance, Deputy Brian Lenihan, for his consideration and the other was handled through the appropriate channels in my Department.

As the Deputy knows, the economic and social implications of climate change are immense and it is the responsibility of Governments everywhere to change behaviour to reduce our greenhouse gas emissions, including carbon dioxide. The most effective way to do this is to put a price on carbon which will encourage innovation by incentivising companies to bring low carbon products and services to the market. This tax is designed to change consumption patterns and encourage fuel efficiency leading to better air quality.

It is estimated that the carbon tax, inclusive of VAT, will yield approximately €250 million in 2010. The revenue will, among other things, be used to boost energy efficiency, support rural transport and alleviate fuel poverty.

I understand it is the general practice for the Department of Finance not to ring-fence revenues for specific purposes but rather to take an overall view on priorities in the context of expenditure decisions which are dependent on Exchequer revenues. In this regard, I understand that revenues from the carbon tax will facilitate investment in the aforementioned areas.

I understand the application of the tax to coal and commercial peat will be subject to a commencement order to allow a robust mechanism be put in place to counter the sourcing of coal and peat from Northern Ireland where lower environmental standards apply. A vouched fuel allowance scheme will be developed to offset the increases for low income families dependent on such fuels. I can inform the Deputy that work has already commenced on this matter within the Department of the Environment, Heritage and Local Government.

As the Deputy will appreciate, carbon taxes will become a feature of economies across the world in the coming years. They demonstrate our commitment to reducing emissions from carbon dioxide and send a positive signal about Ireland's capacity to show leadership to those working for agreement on global climate change.

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