ESRI says Ireland cannot meet onerous EU emissions target

Thu, Jul 17, 2008, 01:00

IRELAND CANNOT meet the onerous emissions reduction targets by 2020 set by the EU unless the most "lunatic" draconian measures are implemented, an Oireachtas committee heard yesterday.

Prof Richard Tol and Prof John Fitzgerald of the Economic and Social Research Institute (ESRI) told the Committee on Climate and Energy Security that a carbon tax would be the cheapest and most effective way of Ireland moving towards the targets. Prof Tol said its benefits were that it would be uniform, predictable and easily understandable.

They both said the target set by the EU is unduly onerous. Ireland is only one of three countries, along with Denmark and Luxembourg, that has been asked to cut greenhouse gases by 20 per cent compared to 2005 levels.

In a presentation made to the committee, Prof Tol made what he described as a "cheeky" suggestion that the carbon tax needed to meet this stringent target would be equal to a carbon tax of €4,000 per tonne of CO2. That level of tax would add €2-€3 to the price of a litre of petrol. The European Commission's own estimate for the price of carbon in 2020 is only €40 per tonne.

When Progressive Democrats Senator Fiona O'Malley asked the ESRI was it serious about imposing a €4,000 tax, Prof Fitzgerald said that they were not suggesting the imposition of such a tax, but were illustrating the onerous nature of the target.

"From our research, we do not think that we can meet that target in any way," he said.

Prof Tol said that a carbon tax of €20 per tonne would raise €550 million per annum, with income rising by eight per cent each year.

He said that the revenue should not be earmarked. If the revenue was put into social insurance and income tax reductions, it would have a positive outcome for the economy, he said, as it would lead to a reduction in labour costs.

Richer households would pay only a fraction more than poorer households in carbon tax, he said. To counter that unfairness, measures such as increases in social welfare, child benefit, and increases in tax credits would need to be taken.

The committee's chairman, Seán Barrett of Fine Gael, said that the current climate change strategy should be scrapped by the Government and a new one published with ambitious, reachable targets for 2050.

In that context, both ESRI representatives talked about the difficulty of meeting the targets by 2020 in areas where there are slow turnarounds of capital. New housing insulation regulations will not have an appreciable effect until the decade after 2020; power plants are not replaced for decades and people hold on to cars for a decade and longer.

Prof Fitzgerald said that agriculture, which is responsible for 28 per cent of emissions mainly through methane produced by livestock, presented a problem.

"We are wrestling with it and do not have an answer on this. If we had to meet the target and it was an absolute imperative, the cheapest thing to do would be to get rid of all our livestock.

"But it would be a lunatic thing to do. It would do nothing for the world. They would just be bred in Brazil or elsewhere," he said.

Prof Tol added that no sector could be exempted. "The other sectors need to work harder. If agriculture is off limits and we are not going to [target cattle], then we have to [target] commuters."