Divisions in the Government over the proposed carbon tax do not necessarily spell good news for hard-pressed motorists. Environment minister Martin Cullen has proposed that a carbon tax of €7.50 per tonne of CO2 emissions be imposed as early as next year and that this will rise to €20 per tonne in subsequent years.
This would add between 3 per cent and 6 per cent to the cost of petrol. It is estimated that a car produces some 100 kilograms of CO2 per 40 litres of petrol used: about one tonne per 400 litres. At the introductory rate of the tax this would mean an additional two cent plus VAT per litre, and at the top €20 per tonne rate an increase of five cent plus VAT per litre.
But things are not that simple. Under an EU agreement with the major car makers, a target of 120 grams of CO2 emissions per km travelled has been set. This is to be achieved by 2005, with 2010 set as the final date for all vehicles to fall within this limit.
Given that most vehicles will get only up to eight kms per litre in urban driving, the actual emission level per litre comes in at around one kilogram. Thus, even at the top rate of the carbon tax, the increase in the price of petrol should be just two cent.
Officials from the Department of the Environment and Local Government say that exact figures haven't been looked at yet, but there will be extensive consultation before rates are set. They stress that our poor performance in relation to our Kyoto Climate Change Treaty obligations will be the overriding factor. Ireland agreed to keep emissions to within a 13 per cent increase on 1990 levels by 2010. We are already ahead of that and, if counter-measures are not taken, it's likely that we will be 35 per cent ahead by 2010, resulting in huge fines.
The increase in car ownership is thought to have caused a major increase and this in turn means that the Government will probably go for the higher figure in relation to the petrol price increase. Motoring organisations like the AA are advising the Government not to use the environment as an excuse to raise taxes. According to the AA's Conor Faughnan: "A five cent per litre duty increase would take over €200 million out of the pockets of ordinary people. It will not make people drive less.
"Providing urban public transport, getting traffic onto modern motorways instead of trundling through towns and villages, basing car taxes not on engine size but on the amount of emissions they cause; these are real environmental improvements. Taking another dip into the wallet of the ordinary motorist is not."
While the Government is broadly supportive of these measures, both the Minister for Finance and the Tánaiste are concerned about the potential impact of a carbon tax on Ireland's competitiveness. But motorists should not seek comfort in those quarters. Their concerns are centred on large industries such as cement manufacturers which could face annual carbon tax bills of tens of millions of euro.
Already there is talk of "emissions trading", with these companies allowed to invest in emissions reductions in developing world countries rather than pay a tax on emissions here. There is also talk of targeting the tax on other areas which would not directly impact on competitiveness - even more bad news for the motorist.