Enterprise Ireland chief calls for flexibility on carbon taxation

Flexibility is essential in plans to introduce new carbon taxation, according to Mr Frank Ryan, the new chief executive of Enterprise Ireland.

"The imposition of a carbon tax across the board and without flexibility could erode market positions that have been hard won over the last number of years," he warned in a statement yesterday.

A new system of carbon tax is due to be introduced in January 2005 to assist in meeting the Republic's commitment to reduce greenhouse gas emissions and meet the targets set down in the National Climate Change Strategy. The tax will be imposed on fossil fuels, with the highest tax on those that emit the most greenhouse gases.

The Government has conducted a consultation programme on the issue, amid complaints from industry about the potential additional costs it could face.

The intervention by Mr Ryan, recently appointed as chief executive of Enterprise Ireland, is seen as significant, as its client companies include many indigenous firms which could be heavily affected by the new measures.

In his statement he said that "the sustained competitiveness of Irish companies operating globally is paramount". Enterprise Ireland was fully aware of the obligations of the enterprise sector under the National Climate Change Strategy, he said. It may be more effective to consider a mix of policies to achieve this objective, according to Mr Ryan, including negotiated agreements that would allow companies choice and flexibility in making their contribution to Ireland's goal of reducing CO2 emissions.

Among the measures that Mr Ryan argues should be used are negotiated agreements - agreements between companies and the Government to save energy and reduce greenhouse emissions. A pilot study by Sustainable Ireland found that energy efficiency gains of 5.4-17.1 per cent were achieved by 26 participating companies.

The other main method due to be used in relation to industry is emissions trading. This will allocate certain emission limits to large industries and allow them to "buy" additional capacity from other companies.

The Government is due shortly to make the key decision on how much of our national emission allowance should be allocated to the companies covered by the emissions trading scheme. The allocations across industry will then be made by the Environmental Protection Agency, advised by a National Allocation Advisory Group.