Olivia Mitchell (Dublin South, Fine Gael)
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Question 146: To ask the Minister for Finance the Government's view on the potential for taxation to play a role in promoting energy efficiency and emission reductions. [39169/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Taxation, as I have previously stated, can play a part in attaining environment objectives which include promoting energy efficiency and reducing emissions. In this regard, the current National Climate Change Strategy does envisage initiatives in the tax area with one such example being tax reliefs for "green initiatives". Essentially this approach uses the tax system to provide incentives for certain behaviour. Such incentives include capital allowances for corporate investment in renewable energy projects which have been available since 1998, and the significant new Biofuels excise relief scheme which I provided for in Finance Act 2006. This latter Scheme will provide for excise relief on up to 163 million litres of biofuels per annum; cost over €200m over 5 years; result in carbon dioxide savings of over 250,000 tonnes per annum; meet a target of 2% transport fuel market penetration by biofuels by 2008; help reduce our dependency on conventional fossil fuels, and stimulate activity in the agricultural sector. As a complementary measure, I provided in Finance Act 2006 for a new 50% VRT relief to promote new flexible fuel vehicles (cars designed to operate on biofuels) for an initial period of 2 years, and also extended the existing VRT relief for hybrid cars by a further year to the end of 2007.