Brian O'Shea (Waterford, Labour)
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Question 200: To ask the Minister for Finance the tax incentive measures he proposes to ensure that Ireland meets the target set down by the European Commission in January 2007 for a 30% reduction in emissions over 1990 levels over the next 13 years; and if he will make a statement on the matter. [3881/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The targets referred to by the Deputy featured in a recent communication from the European Commission. They have yet to be agreed by Member States and these discussions will be dealt with by my colleague the Minister for Environment, Heritage and Local Government. I have stated before that, in conjunction with other policy measures, taxation can play a part in achieving environmental objectives.

Tax measures considered necessary towards meeting a new emissions target when agreed, will be considered in that context. In this regard, I am pleased to inform the Deputy that in Finance Act 2006 I provided for significant tax measures to promote biofuels in Ireland. This scheme, which received the necessary EU State Aid approval, commenced in November 2006 and will:

provide for excise relief on up to 163 million litres of biofuels per annum;

cost over €200m over 5 years;

when fully operational, result in CO2 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.

In addition, I announced on Budget day the commencement of a Public Consultation on Options for revising the VRT system to take greater account of CO2 emissions. I invited interested parties to make submissions to my Department by 1 March 2007. A summary of a number of possible Options which are under consideration by my Department was contained in the Budget 2007 documentation and a longer consultation document has also been placed on my Department's website. In addition, an invitation for submissions was advertised in the national daily newspapers on 15 December 2006. A similar consultation is under way on motor tax, which is under the remit of my colleague, the Minister for Environment, Heritage and Local Government. The intention is that from a target date of January 2008, cars with lower emissions will be rewarded with lower VRT and motor tax while increased taxes would be in place for higher emission cars. Currently, there are VRT reliefs in place for hybrid cars, flexible fuel vehicles and electric cars. My Department will also examine, in the context of the preparations for Budget 2008, the case for disallowing (totally or in part) capital allowances and leasing expenses for high CO2 emission vehicles. Consultations will take place with the motor industry and the business sector as part of any review.