Jim Walsh (Fianna Fail)

Cuirim fáilte roimh an Aire Stáit go dtí an Teach chun an Bille tábhactach seo a phlé.

Like Senator Coffey, I welcome the Bill and the general thrust is definitely in the right direction for the reasons outlined by the Minister of State. Carbon credits can be seen as a licence to pollute and they cover a position where people will be able to purchase such credits in future when stipulated emission levels are not being met. Whereas one might be critical of this, it is a sensible approach taken at EU level which is seen to address significant CO2 emissions that severely impact on climate change and the environment in general. It can equally be argued that the credits provide a reward for those who effectively reduce emissions, as that opportunity cost can be passed on. This stems from EU Directive 87/2003/EC and generators generally get the allowances for free. This is providing for a windfall gain. The Minister of State referred to this as unearned carbon windfall gains and the unearned aspect is an important element.

Given our energy market, one of the issues we have as a small island on the periphery of Europe is our competitiveness generally. Energy costs, like the labour costs about which we have spoken many times in the House, are significant and with our energy market it is important to get to the stage where we have best practice and the most competitive rates we can get within the European Union. If we fail to do so, our economic growth will be adversely affected as a consequence. Initiatives such as the North-South and east-west interconnectors, with our investment in green energies such as wind and wave power, will in time perhaps put us in a position to generate beyond our usage and thus allow export of electricity. That is the ideal position.

I have noticed since the introduction of this topic and the publication of the Bill that there have been press reports speculating on the possibility of legal challenges to the provisions of the Bill. I note that countries such as Germany, France and Spain have introduced legislative measures that were struck down as in breach of the EU directive when challenged in court. I am told that there are other examples, including Finland, where this has not happened as legislation has been shaped in such a way as to avoid such challenges. Will the Minister of State outline in more detail how our legislation might compare with those successful countries and earmark the distinction between what we are doing and what happened in those countries where the legislation was found to be in contravention of regulations?

The Minister of State estimated what will accumulate as a consequence of this measure. Some press reports indicated industry sources have made this estimate as high as €200 million. Will the Minister of State, therefore provide some clarification in this regard? In the good old days the Department of Finance tended to under estimate the revenue stream from all sorts of taxation measures. It found itself under estimating the extent of the difficulties we faced but these deficiencies seem to have been corrected and do not happen now to the same extent.

A new market is evolving in the energy field with regard to carbon credits which can be bought and sold. There is a significant range in the market, with figures of €12 to €25 per tonne mentioned. The idea is that the measures taken today will improve our competitiveness by allowing credits which are windfall measures accruing to energy companies to be credited to the major users of electricity here, including large multinationals and strong employers which form the backbone of the economy.

At a time of high unemployment especially but at any time in general, it is important that our focus is on the productive sector of the economy. To some extent, we may have lost sight of this in the past, with the bloating of the public sector which is paid for by productivity in the private sector. That should not be forgotten. A side effect is that generating companies which are getting unearned carbon windfall gains could see subsidisation. If we want energy companies to be competitive and to produce at the lowest possible sustainable cost, the more economic and competitive pressures they see, the better. There can be short-term revenues, a fact we have recognised in the Exchequer finances. The property windfall tax allowed us to escalate costs to a level we now see as unsustainable. It is important to take action such as outlined in the Bill to correct such issues.

I have mentioned that the levy is temporary and the Minister of State has outlined that it will terminate on 31 December 2012, when the European Union will begin to auction carbon allowances to EU member states. Companies will then be in a position to buy them from the State.

There is one matter with which I am not entirely in agreement and which might perhaps be revisited. I refer to the fact that the funds which will accrue to the Exchequer will be disposed of for its benefit, at the direction of the Minister for Community, Equality and Gaeltacht Affairs and with the consent of the Minister for Finance. Revenues from these sources can sometimes be used to subsidise inefficiencies within the public sector.