Written answers

Tuesday, 26 June 2007

10:00 pm

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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Question 124: To ask the Tánaiste and Minister for Finance the tax incentive measures he will introduce to ensure that Ireland meets the new target agreed by EU leaders of increasing renewable energy to 20% of all energy use by 2020; and if he will make a statement on the matter. [17180/07]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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The Government have already made clear that renewable energy will be a critical and growing component of Irish energy supply to 2020 and beyond. Renewable energy is an integral part of our climate change strategy and sustainability objectives. The additional diversity which renewables bring to Ireland's energy demand will also make a direct contribution to our goal of ensuring secure and reliable energy supplies.

While the promotion of renewable energy is primarily a matter for my colleague, the Minister for Communications, Energy and Natural Resources, as I have stated previously the taxation system, in conjunction with other policy measures, can play a part in attaining environmental objectives including the development and deployment of renewable sources of energy. In this regard the taxation measures which are already in place or are being introduced include:

a five year excise relief scheme for biofuels, costing over €200 million, which commenced in November 2006. The scheme provides for excise relief on up to 163 million litres of biofuels per annum;

50 per cent VRT relief for hybrid vehicles, flexible fuel vehicles and electric vehicles;

extending the qualifying period from 31 December 2006 to 31 December 2011 for the scheme of corporate tax relief for corporate equity investments in certain renewable energy generation projects i.e. in solar, wind, hydro or biomass technology categories, and which have been approved by the Minister for Communications, Energy and Natural Resources;

extending to 31 December 2013 and enhancing the Business Expansion Scheme and the Seed Capital Scheme which can, among manufacturing other areas, be used for investment in companies engaged in renewable energy generation and recycling;

amending the VRT and motor tax systems to take greater account of environmental issues, in particular CO2 emissions.

Furthermore, the Programme for Government signals that a carbon tax/levy will be introduced over the lifetime of this Government. The matter of the introduction of a carbon tax is one of the issues to be considered by the new Commission on Taxation to be established under the Programme. Consequently, at this stage, the precise design of such a tax has yet to be determined. This will, of course, form an important part of the normal deliberative process of the Government in setting fiscal and environmental policy. Deputies will recall, however, that the Programme for Government indicates that the phasing-in of a carbon levy will be on a revenue neutral basis, so it is not intended that its introduction will lead to any net Exchequer revenue increase or net addition to the overall tax burden.

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