As an environmental activist, I am a firm supporter of an incremental carbon tax in Ireland. In fact I’m all for higher taxes when it comes to products and fuels and which are damaging to our environment and substances which cause havoc to the health of our society. However, is the Irish nation ready for another tax hit and have the Irish Government failed to lead us into a society which rewards sustainable lifestyle choices? Taxation never makes for light reading so I’ll keep it as bouncy as possible and for some well needed comic relief I will conclude my points with some take-home mental observations.
As a heavyweight contributor to greenhouse gas (GHG) emissions, Ireland has a pivotal role to play in the mitigating of climate change. Considering Ireland’s continued short-fallings to mitigate the effects of climate change, immediate governmental policy is paramount to amend the overshot emissions trajectory the country is facing. Whilst the introduction of an incremental carbon tax won’t guarantee a reduction in GHG emissions from fossil fuel-dependant energy and transport sectors, it is one of the main policy tools used for mitigating climate change globally. Let me explain a little bit about the current situation and after you’ve finished the article you can sign our TICK petition if you wish to do so.
Without intending to be negative or defeatist, I have concerns that the current carbon tax policy has little effect in reducing GHGs in Ireland. Whilst the scenario proposed from our Taoiseach to invest revenue generated from carbon tax into tax credits and welfare schemes holds merit for some, it does nothing to mitigate the effects of climate change for future generations. National non-acceptance of the promised tax increase is likely and the probable reason behind the decision not to increase the tax rate in the 2018 financial budget. Should a more favourable scenario be adopted, which sees carbon tax revenue ringfenced into a transparent environmental fund, climate mitigation subsidised by a carbon tax is more likely to be effective in reducing GHG emissions. Such an equitable investment, backed by Irish society, would increase the potential for developing renewable energy economy as well as marginally influencing the behaviour change necessary in our consumption heavy society.
Mental observation #1: Must develop some sort of payback scan app where I can redeem credits for good eco-behaviour.
I will recap Ireland’s static position in reducing CO2 emissions but for a full synopsis on the situation read back on Aoife’s post on Climate in Ireland. At the recent COP24 session in Poland, the Climate Change Performance Index (CCPI) exposed Ireland as the worst country in the European Union on climate action for the second year in a row. The report ranked Ireland as 48th out of 56 countries worldwide, which are together responsible for more than 90% of global GHG emissions. Further to Ireland’s detriment, the index in the same report, puts Ireland’s performance in reducing greenhouse gas emissions (GHGs) in the ‘Very Low’ category and we can be seen as the condemned red blotch at the edge of Europe in the image below.
Mental observation #2: Head hangs deeply in shame…
Table 1- Overall performance Results CCPI 2019
According to projections by the EPA, by 2020, the Transport and Agricultural sectors in Ireland will be the largest contributors of GHG emissions. In 2020 the Transport sector will account for 23% of Ireland’s emissions largely due to increased fuel consumption from motor vehicles. At best, by 2020 Ireland will only achieve between a 0% – 1% reduction of emissions below 2005 levels compared to a target of 20%.
It seems we are chasing our tail in this constant battle to excel versus mitigate. This week saw a backlash from health stores nationwide when the Irish Government announced at the end of 2018 that health supplements such as vitamins, minerals and fish oils would cease to enjoy a zero rate of VAT and instead be charged the standard rate of 23%. It is import at this stage of my argument to note that agricultural livestock VAT in Ireland enjoys a rate of 4.8%.
Mental observation #3: So basically if you intend to go vegan, cycle to work or retrofit your house to be carbon neutral you will remain in a marginalised group, while contributors to the agriculture, transport and energy sector continue, unrebuked, to increase the rate of harmful emissions in Ireland….Insert tumbleweed silence…
Carbon taxation and GHG emission penalties.
Despite costly taxes on fossil fuel dependent energy and motor vehicle fuels, Ireland’s GHG emissions continue to miss reduction targets and this linear economy strategy does little to reduce our dependence on non-renewable energy. A study of carbon taxation in Norway found that by increasing the costs of certain fuel types, the reduction of CO2 emissions was modest. The carbon taxes resulted in a total emissions reduction of 2.3% in Norway between 1990-1999.
Although the penalty sum is not yet clear for failing to reduce non-Emission Trading Scheme (ETS) GHG emissions, according to the Public Policy Advisors Network, the Exchequer will pay in the region of €500 to €750 million Euro in UN fines. Yikkes! This penalty figure has not hit home to most tax payers and is likely to generate ammunition for a backlash on next years financial budget.
Mental observation #4: I think Leo (Ireland’s PM) might have more to worry about than the hysterical criticism he is currently facing over his eating more salad than burgers.
Carbon taxation funds
Other than the carbon tax raising revenue, the 2018 financial budget describes the carbon tax as “welfare-enhancing”. The government failed to increase the tax rate from €20 per tonne of CO2 emissions to €30 per tonne including an incremental increase rising to €80 per tonne by 2030, as recommended by the Climate Change Advisory Council. During a November 21, 2018 Dáil Éireann debate, in defence of failing to increase the carbon tax in 2018 as promised, Taoiseach Leo Varadkar argued that “if the Irish Government are going to increase carbon taxes, the model being pursued in Canada should be followed, where the money is given back to people in the form of tax credits and welfare”. If Taoiseach Leo Varadkar intends to model the carbon taxation fund on the Canadian model, he should consider the parallels of the two nations and what the model can do to effectively reduce CO2 emissions.
Mental observation #5 (The elephant in the room): The CCPI ranked Canada in 54th place of the effectiveness of climate action in 56 countries…
Acceptability of a carbon tax increase.
Results found that after British Columbia (BC) implemented a 5 cent per litre carbon tax on gasoline, consumption reduced by only 8%. The Irish Government is likely to suffer the same opposition from rural regions as seen in BC, due to a lack of public transport infrastructure in remote regions creating an inequality predicament associated with a standard carbon tax increase. Ireland doesn’t yet have a sustainable transport system comparable with top ranking climate mitigation countries such as Denmark. To increase taxes on motor vehicle transport without offering an efficient public transport system for both urban and remote regions, is likely to lead to a backlash from both those on lower incomes and those who reside in more remote areas.
Of the working commuters recorded by the 2016 census, the 66% (and increasing) statistic of commuters travelling by motorised vehicle are not likely to switch to sustainable or active travel if the transport system remains inefficient and by not investing the carbon tax revenue into an environmental fund there is no guarantee of reducing GHG levels.
Figure 3- 2016 census Commuting in Ireland
Further to the potential resistance of a carbon tax increase, if the generated taxes were to be invested into tax credits and welfare schemes this would lead to an inequitable and linear economy scheme with potentially minimal reductions in GHGs.
The Irish Government are not likely to rush into another tax increase when non-acceptance and backlash are unclear, potential obstacles. In 2017 the Water Charges billing regime was abolished after the Irish government faced a major resistance of the regime by the public, who were at the time suffering an unemployment rate of 12.9%. Despite paying for water services as being crucial to putting an economic value on a vulnerable natural resource, the implementation of the regime was entirely flawed. The timing of the new charges was unsuitable for the depleted economy and its implementation impacted low-income households disproportionately.
However, considering the value of goods output by the agri-food sector was €8 billion in 2017, fears of non-competitiveness that can be associated with reducing CO2 emissions, from agriculture for example, is a more probable barrier.
Mental observation #6: I do hope Leo Vradkar leads by example in deciding to go full whack vegan and create chaos for the IFA Irish Farmers Association)!
To conclude on a more realistic note, in terms of climate mitigation, industry and production efficiency is not necessarily sustainable and both will continue to emit GHGs as production outputs increase annually. Collecting revenue from non-renewable fuels, as seen in the Canadian and Norwegian models, is not guaranteed as being effective in reducing GHGs and is not likely to instil the needed behaviour change in society to switch to renewables. There are short-term risks of reduced market competitiveness associated with reducing GHGs, however revenue generated from carbon tax can subsidise employment generating renewable energy development. Introducing an incremental carbon tax with fully transparent investment into environmental schemes such as sustainable transport infrastructure and the retro-fitting of buildings will create real and measurable reductions in Ireland’s CO2 emissions. By committing to an incremental carbon price structure, individuals and businesses can accurately plan to invest in fuels and renewable energy sources which are less CO2 intensive. Furthermore, individuals will be more likely to accept carbon tax increases if they can utilise available sustainable modes of transport and see the financial returns of retro-fitting their homes to being energy efficient.
So, are you ready and willing to start paying an incremental carbon tax increase? TICK here.
#7: PS. Sorry for the bashing @campaignforLeo and the best of luck with the Greens.
Further reading and references
Greenhouse Gas Emissions – Do Carbon Taxes Work?, Annegrete Bruvoll and Bodil Merethe Larsen.- Statistics Norway, 2004.
Pre-Budget 2019: Energy and Environmental Tax Issues and Options, Parliamentary Budget Office, 2018.
Refining the evidence: British Columbia’s carbon tax and household gasoline consumption, Chad Lawley and Vincent Thivierge, 2018.