Brendan Howlin (Wexford, Labour)
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134. To ask the Minister for Public Expenditure and Reform his plans to allocate revenue generated from the carbon tax to farmers; the timeline he envisages for this distribution; and if he will make a statement on the matter. [49124/21]

Michael McGrath (Cork South Central, Fianna Fail)
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All of the revenues raised by the planned increases in the carbon tax will be used to support increased Government spending. In particular, the Programme for Government commits to use the funds resulting from increases in the carbon tax to:

- Ensure that the increases in the carbon tax are progressive through targeted social welfare and other initiatives to prevent fuel poverty and ensure a just transition;

- Fund a socially progressive national retrofitting programme targeting all homes but with a particular emphasis on the Midlands region and on social and low-income tenancies;

- Allocate funding to a REPS-2 programme to encourage and incentivise farmers to farm in a greener and more sustainable way.

€5 billion of the expected €9.5 billion in additional carbon tax receipts will be invested in energy efficiency. This €5bn forms part of the €12.9bn in capital funding for the Department of Environment, Climate and Communications confirmed in the recently published NDP.

That document also notes that the remaining €4.5 billion in anticipated additional carbon tax receipts will be used to boost the Government’s current expenditure levels. €1.5 billion of additional current funding will be made available over 2021 – 2030 for new schemes that will assist farmers in the decarbonisation of the agricultural sector. The specific use of carbon tax funds in the sector for the period to 2027 will be detailed in the Government’s implementation programme for the new Common Agricultural Policy 2023 – 2027.

The remaining €3 billion in funding will be explicitly used to ensure that increases in the carbon tax are progressive by tackling fuel poverty and providing for a Just Transition. The Government will continue to be guided by the latest emerging research on how to protect the vulnerable from the impacts of the rising carbon tax. As such, decisions on specific compensatory measures will be made as part of the annual budgetary cycle.

I am committed to being as transparent as possible on the use of carbon tax funds. As part of this commitment to transparency, my Department will publish a paper alongside the Budget detailing the allocations for 2022. This is in line with similar reports that were published alongside Budget 2020 and Budget 2021.