Brendan Smith (Cavan-Monaghan, Fianna Fail)
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43. To ask the Minister for Finance his plans to exempt household fuel products from carbon tax in view of the difficulties for fuel merchants and small businesses in the Border counties; and if he will make a statement on the matter. [17517/16]

Michael Noonan (Limerick City, Fine Gael)
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I am aware of concerns that fuel traders in the border counties have expressed about the impact the carbon tax is having, and that the price differential with Northern Ireland for solid fuel could give rise to trade distortions. 

The introduction of Carbon Tax was about sending a price signal that there is a cost associated with the consumption of fossil fuels to the detriment of the environment. In this regard solid fuels, which have been traditionally favoured by household consumers, have the highest carbon content of all fossil fuels and given the environmental impact it is important they are taxed.

While the carbon tax was introduced for other fuels in 2010, its application to solid fuels did not occur until its  phased introduction in 2013 and 2014.

Coupled with the long lead in period to the implementation of carbon tax on solid fuels, the Sustainable Energy Authority of Ireland provide generous grants via Better Energy Homes scheme and also provides home energy upgrades free of charge to vulnerable households via Better Energy Warmer Homes to reduce dependence on combustion of fossil fuels for home heating.  The Better Energy Homes Scheme has to date provided over €190m in funding to over 185,000 homes resulting in a reduced energy demand.

These policies have contributed to a reduction of greenhouse gas emissions from the residential sector which were 10.4% lower in 2014 compared with 2013 levels.  These reductions are mainly from decreased solid fuel consumption for space and hot water heating in homes in 2014 as well as increases in renewable energy consumption.

Greenhouse gases are contributing to climate change and as a signatory to the UNCOP 21 Paris Agreement, Ireland has committed to play its part in reducing emissions. The carbon tax, as part of the overarching energy strategy, is a key tool towards meeting these commitments.  The carbon tax is deemed to be the most cost effective way of reducing overall emissions and therefore plays an important role of providing incentives for emission reduction activities in this regard. It is important therefore that the tax is levied on all fossil fuels fairly to encourage behavioural change.

Accordingly, I do not intend to exempt household fuel products from carbon tax.