Thomas Gould (Cork North Central, Sinn Fein)
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170. To ask the Minister for Communications, Climate Action and Environment his views on the carbon tax and the current cost of living crisis given previous reports, including the ESRI Statistical Report Series 98 of October 2020. [9608/22]

Eamon Ryan (Dublin Bay South, Green Party)
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The carbon tax is a key pillar underpinning the Government's Climate Action Plan 2021  targets to halve emissions by 2030 and reach net zero no later than 2050. These legally binding emission targets are set out in the Climate Action and Low Carbon Development (Amendment) Act 2021.

In line with the Programme for Government, the revenue that will be raised from carbon tax will be used to:

- Ensure that the increases in the carbon tax are progressive by spending €3 billion on targeted social welfare and other initiatives to prevent fuel poverty and ensure a just transition;

- Provide €5 billion to part fund a socially progressive national retrofitting programme;

- Allocate €1.5bn of additional funding to encourage and incentivise farmers to farm in a greener and more sustainable way.

In this way the Carbon Tax is being used to fund policy measures that are progressive and support households who are vulnerable to the impact of global energy price increases.

Analysis undertaken at Budget time using SWITCH - the ESRI tax and benefit model, to simulate the impact of the carbon tax increase and the compensatory welfare package, has estimated that the net impact of the combined measures is progressive and households in the bottom four income deciles will see all of the cost of the carbon tax increase offset, with the bottom three deciles being better off as a result of these measures.

Further details on the use of Carbon Tax funds can be found at: www.gov.ie/en/publication/7599a-budget-publications/.

The Department of Finance advise that the key drivers of inflation in recent months are 'base effects', the imbalance between global demand and supply that has emerged as economies re-opened, and increases in global energy prices.  The increase in energy prices in Ireland is driven by the spikes in energy prices on the global markets.

The Government has taken action to support households.

Budget 2022 contained a large range of measures to protect households from the rising cost of living, including a personal income tax package worth €520 million and a social welfare package of over €550 million.  In addition to the Budget 2022 measure, the Government has this month approved a further package of measures to the value of €505 million to mitigate the cost of living, including an increase in the energy credit  to €200 including VAT and lump sum payment of €125 on the fuel allowance.