Dick Roche (Wicklow, Fianna Fail)

That is a fair point. Why does the audit system relating to transport not take into account all of the issues? The point is that the system in place was established by the United Nations and applies equally across the globe. I am of the opinion that aviation fuel should be included under this system. It is anomalous that such fuel is not included. Ireland pays a penalty because fuel tourism increases the size of our carbon footprint. The other country that pays a penalty as a result of its low-tax economy is Luxembourg. The spike in transport emission levels outlined in the recent EEA, EPA and SEI reports came about because there are huge sales of fuel to non-domestic customers in both Ireland and Luxembourg.

We could do what the Labour Party wants and increase the tax on fuels but that is not an attractive proposition. We are obliged to buy the equivalent of 2 million tonnes of carbon credits to deal with out-of-State sales of fuel. However, this cost is infinitely offset by money we accrue from excise duties imposed on out-of-State sales. We receive of the order of €350 million to €370 million from such sales. The total cost of purchasing carbon credits over the entire Kyoto period will be €270 million. We are, therefore, in profit every year.

Senator O'Toole inquired about other actions that might be taken. The nitrates action programme and the Common Agricultural Policy reform programme will contribute carbon savings to this country of 2.4 million tonnes. From where will the payback come in this regard? The State is providing support for farmers who are moving into schemes which deal with it environmentally. It illustrates the point the Senator made, that the debate is at a wrong level in Ireland. We are focusing too much on one aspect of the debate rather than focusing on all of the aspects of it.

For example, the changes in the building regulations are worth 300,000 tonnes per annum and also are relatively cost free. In the transport area, as Senator Brady pointed out, Luas is making a phenomenal contribution to us in this regard. In the first 12 months of operation Luas carried 26 million passengers. The DART has been upgraded by Government through significant investment to the point where it now carries 90,000 per day. The 80,000 passengers per day from the Luas together with the 90,000 per day of the DART amounts to a significant saving.

Senator Bannon's point about transport was quite correct. If one looks at the statistics for carbon emissions, one will find that transport has generated a phenomenal increase in carbon emissions. In fact, in 1990 the carbon emissions from transport amounted to 9% of our total carbon emissions. This figure had risen to 18% by 2004. There is a simple enough reason for this: the fleet has more than doubled. Our employment has doubled. There are 2 million employed in Ireland now and there was 1 million employed in 1987. There are more people travelling to work every day and they all cannot be expected to use public transport because the public transport system in this country still needs much investment.

One cannot decide, as Stalin might have, to interfere with those people's rights to use whatever mode they need. What one must do, as the Government is doing, is invest heavily in public transport. One could make the valid criticism that over the history of State, there has not been enough investment in public transport, and that would be true, but one cannot change the past whereas one can change the future. A sum of €16 billion is being provided for public transport in Transport 21 and that will produce phenomenal savings, as well as improvements in the quality of life.

Senator Bannon did not take the extremist view taken by other parties that we should not be buying carbon credits, although I noted he was careful not to answer Senator Brady's question on this. His party spokesman, Deputy O'Dowd, indicated that he did not oppose this in principle. I can well understand why that would be the case. It is logical and makes sense because cement production, which is important in Deputy O'Dowd's constituency, contributes significantly to carbon emissions.

If we were to go the route proposed by the Green Party and the Labour Party, we would impose a vast carbon penalty directly on all the emitters and would force them to bear the full cost of all emissions. On the question of who would be the beneficiaries of such a route, the best example to take is the aluminium plant at Aughinish in Senator Daly's constituency, about which he has spoken to me on several occasions. If we were to force Aughinish Alumina to carry the full cost of all carbon, one would add approximately €50 million over the indicative period to the company's costs, close the company down, put 500 in the plant out of work and put at least another 500 elsewhere out of work. The worst aspect about it, however, is that one would gain nothing. Fine Gael does not propose this, but Labour and the Green Party do. One would gain nothing because one would simply move the production of that material to another country, as has happened in some parts of Europe where cement companies have transferred their production offshore to north Africa with the result that the cement is imported, is produced in a less environmentally friendly way and adds to global emissions, because it is a global problem.

This is why I am so taken by Senator O'Toole's analysis because it is the first analysis in the debate in either House that I have heard which looks at this issue in a holistic way. One must remember that if one drives industry out of the European Union and especially out of Ireland, not only does one impose the penalty on the workers in those industries, one imposes a further penalty on the world because one drives industry to countries where there are lower standards and which are not signed up. The reason so much industry is going offshore to China is because it still has a regime which allows irresponsible forms of production and China, to be fair to it, will make the argument that those in the western world caused the problem to date and will ask that it be given a few years to catch up with us. It is a complex issue and it was well illustrated by Senator O'Toole.

The Senator also asked about the determination of the price. It was independent international consultants who established the price at €15 for government-to-government trading. It was mentioned by Senator Bannon that it could be double, treble or quadruple that figure. The reality is that the cost of carbon credits has come down.

On the purchasing arrangements which we have made to date, to answer another question by Senator O'Toole on who certifies the validity of the schemes into which one is making the investment raised, because we have bought through the European Bank for Development and Reconstruction, EBDR, and through the World Bank, we have certification by those agencies as to the validity. Senator O'Toole is quite correct. One of the big dangers in this area is that one will get a grey market. If Senators will excuse the pun, there is a so-called hot-air market coming out of Kazakhstan or Belarus due to collapsing economies rather than carbon saving.