Pat Rabbitte (Dublin South West, Labour)
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Question 11: To ask the Minister for Communications, Energy and Natural Resources his views on the best use for the ESB windfall gains levy on free carbon allowances; and if he will make a statement on the matter. [28036/08]

Eamon Ryan (Dublin South, Green Party)
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The question of windfall gains to electricity generating companies as a result of the free allocation of carbon allowances is a complex one. It arises as a result of the way the EU's Emissions Trading Scheme was constructed. As such, it is an issue which faces not only Ireland, but all EU Member States. It should be noted that to date only one EU Member State, Spain, has introduced measures to deal with windfall gains, and these are now subject to appeal and legal challenge.

Furthermore, as the Deputy will be aware, the EU Commission has proposed that, from 2013, all allowances will be auctioned thus removing the windfall profit dimension. From now until 2013, the free allowances remain in place and their treatment, as confirmed by my colleague, the Minister for Finance, in the House recently, is subject to an ongoing examination by his Department, which has lead responsibility for all matters relating to taxation.

In terms of the possible deployment of the proceeds of any carbon windfall gains levy or tax, there would be many considerations to take into account. There are a variety of potential implications inherent in any particular approach. Certainty about the effectiveness of a particular approach would be a key requirement.

Among the issues for consideration is the manner in which any tax or levy might be applied, the extent of its application and the legal basis for any particular approach proposed. The impact on the operation of the all-island Single Electricity Market, which straddles the two jurisdictions, is also a major factor that needs to be taken into account.

As increases in international fossil fuel prices impact on electricity and gas prices, the issue of windfall gains by power generators becomes more pertinent. In that context, I welcome today's announcement by the ESB that it has agreed with the CER to make a €300m contribution to help offset, for all customers, forthcoming electricity price increases due to rising global fuel costs.