Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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138. To ask the Minister for Finance his views on whether renewable electricity generated outside the State, and which was transmitted by means of a guarantee of origin certificate through the fuel mix disclosure process separate from the flow of electricity, is eligible for relief from the electricity tax. [8626/24]

Michael McGrath (Cork South Central, Fianna Fail)
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Ireland’s taxation of fuel and electricity is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). The ETD provisions relating to electricity taxation are transposed into national law in Chapter 1 of Part 2 of the Finance Act 2008 (as amended). This legislation provides for the application of an excise duty, in the form of Electricity Tax, to electricity supplied to consumers in the State. Electricity Tax is currently charged at €1.00 per megawatt hour which is one of the lowest excise duty rates on electricity across the EU. Provisional figures for 2023 indicate Electricity Tax yield of €4.24 million, up from €3.5 million in 2022.

Section 63(1)(b) of the Finance Act 2008 provides for a full relief from Electricity Tax for electricity generated from renewable sources, including solar, wind, wave, tidal or geothermal/hydraulic origin and biomass. The relief is operated by way of remission with liable suppliers required to declare the quantity of electricity for which relief is claimed on their annual Electricity Tax returns. As the Deputy is aware the electricity market is complex with multiple transactions between suppliers and electricity producers, both in the State and across the EU. This means that there may not always be clear traceability of renewable supply from the producer to the consumer. Where a supplier cannot establish the origin of electricity it supplies to consumers, section 63(4)(c)(i) of the Finance Act 2008 provides that Fuel Mix Disclosure data should be used.

Fuel Mix Disclosures are a key element of the regulatory framework for the electricity market in the State, the oversight of which falls within the remit of my colleague, the Minister for the Environment, Climate and Communications. Under the regulatory framework suppliers must provide details to consumers on the origin of electricity supplies. They must also provide details, in the form of Fuel Mix Disclosures, to the Commission for Regulation of Utilities (CRU). Electricity suppliers may trade across the EU in Guarantees of Origin. These are electronic documents certifying that a quantity of electricity was produced from renewable sources, and they may be used as the basis for accounting for renewable electricity in Fuel Mix Disclosures. Irish electricity suppliers may supplement the electricity which they have sourced in Ireland, by buying additional Guarantees of Origin to certify that a greater share of their electricity demand is covered by renewable sources. This means that Irish electricity suppliers’ Fuel Mix Disclosure data can indicate a higher share of renewably sourced electricity than the share physically generated in the State from renewable sources.

The provisions in section 63(4)(c)(i) of Finance Act 2008, allowing the use of Fuel Mix Disclosures data where suppliers cannot establish the origin of electricity supplied to consumers, support the effective operation of Electricity Tax in situations that would otherwise be unclear. I am advised by Revenue that claims for Electricity Tax relief are subject to compliance interventions on a risk basis, as is the norm with all self-assessed taxes, and where non-compliance is detected, it is dealt with under the terms of Revenue’s published Code of Conduct for Revenue Audit and other Compliance Interventions. This could involve the collection of any underpaid Electricity Tax, together with interest and penalties, if appropriate.

Michael McGrath (Cork South Central, Fianna Fail)
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As the Deputy will be aware, in 2022 in light of the acute impact rising prices were having on households and business, Government provided for excise rate reductions in the order of 21, 16 and 5.4 cent per litre on petrol, diesel and Marked Gas Oil (MGO) respectively. These temporary reductions were due to end initially on 31 August 2022 but following review and monitoring of fuel prices were extended until February 2023 with a phased restoration beginning in June 2023, followed by a second restoration in September 2023. A final restoration of excise rates was due to take place on 31 October 2023 but in Budget 2024, I provided for a further extension until 31 March 2024 with a phased restoration legislated to occur in two final stages on 1 April 2024 and 1 August 2024.

While I recognise that households and business continue to face challenges, the Government must strike the appropriate balance between providing support and avoiding fuelling cyclical inflationary trends.

To note national average prices have eased considerably from highs of over €2.00 per litre which we saw in 2022. As per the Central Statistics Office Consumer Price Index, average national retail prices of auto diesel and petrol have decreased from approximately €1.85 per litre in October 2023 to approximately €1.69 per litre for diesel and €1.68 for petrol in January 2024. More recently the European Commission Weekly Oil Bulletin shows that the national average price as of 19 February 2024 was approximately €1.70 for both fuels.

In conclusion, I have no plans to postpone the excise restorations of 8cpl for petrol and 6cpl for diesel, the first phase of half these amounts ( 4cpl and 3cpl respectively) which is due to commence on 1 April 2024.