Deirdre Clune (Cork South Central, Fine Gael)
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Question 27: To ask the Minister for Agriculture, Fisheries and Food his views on whether the introduction of a carbon tax will have a serious cost competitiveness impact on farm business; and if he will make a statement on the matter. [16956/10]

Brian O'Shea (Waterford, Labour)
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Question 81: To ask the Minister for Agriculture, Fisheries and Food the amount that carbon tax on farm diesel will cost the sector annually; and if he will make a statement on the matter. [16912/10]

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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I propose to take Questions Nos. 27 and 81 together.

The implementation of a carbon tax on fossil fuels is, in the first instance, a matter for my colleagues, the Minister for Finance and the Minister for the Environment, Heritage and Local Government. The Finance Bill, 2010, introduced carbon taxation of mineral oils which will apply to petrol, auto-diesel, kerosene, marked gas oil, liquid petroleum gas, fuel oil and natural gas. These increases, which, when VAT is included, amounted to 4.2 cent on a litre of petrol and 4.9 cent on a litre of diesel, arose from the application, in budget 2010, of a carbon charge on those fuels, at a rate equivalent to €15 per tonne of CO2 emitted.

When introducing the levy, Minister Gormley explained the principle of carbon pricing, noting that this mechanism is widely accepted as the most effective way to secure emission reductions. It is the basis of the EU's Emission Trading Scheme, which applies to the bigger emitters such as power generators and industrial plants. It should be noted that, apart from installations that have already made very considerable emissions reductions through their participation in the EU's emissions trading scheme, no sector of society is exempt from this tax.

The aim of the carbon tax is to use the increase in cost as a catalyst to effect behavioural change with regard to the consumption of fossil fuel and thereby cause a subsequent reduction in emissions associated with that reduced consumption. There is a considerable degree of variability in this across the various farm systems. The expectation is that farmers like everyone else would seek to reduce fuel use and therefore reduce the costs associated with the carbon tax. My colleague, the Minister for Finance has advised that it is estimated that the amount of revenue arising from a carbon tax of €15 per tonne on Marked Gas Oil or 'green diesel' used by farmers is €12.5 million in a full year and as it is being applied from 1 May 2010 will amount to approximately €7 million in 2010.

It should be borne in mind that a significant financial concession is already afforded to the agriculture sector in the form of relief from excise duty on marked gas oil. Currently, excise duty on marked gas oil amounts to 4.7 cents per litre compared to an excise duty rate on auto-diesel, which, at 41 cents per litre, is almost ten times higher. I am acutely aware that the imposition of this levy is not without competitiveness consequences for farmers and for tillage farmers in particular, however, with greenhouse gas emissions from agriculture accounting for almost 40% of Ireland's non-trading sector emissions I am also very conscious of the need to achieve reductions in these emission levels.