A CHANGE to the new carbon tax to ensure it does not unfairly penalise producers of biofuels is being considered in discussions on the Finance Bill, to be published next week.
A group representing the biofuel industry claims the manner in which the tax has been applied is penalising environmentally-friendly fuels. The tax was introduced in last month’s budget.
Pure biofuel is exempt from the carbon tax. However, the levy applies fully to blends where biofuel makes up less than 10 per cent.
The Irish Bioenergy Association yesterday said this was an injustice and acted as a disincentive for biofuel producers and consumers.
The carbon tax, which was announced in December’s budget, has imposed a tax of €15 per tonne of carbon dioxide emissions. That translates into an increase of about 4.5 cent on the price of diesel and petrol at the pumps.
Discussions between the Department of Energy and the Department of Finance this week on the application of the tax are ongoing.
The Department of Energy said yesterday that it recognised the problem and was hopeful that it would be addressed in the Finance Bill. One solution that has been canvassed is that the biofuel component of the fuel be exempt from carbon tax, with the tax applying only to the fossil fuel component.
“Biofuels are very important in terms of security of supply and the environment. We are cognisant of this issue and have been in ongoing talks with the Department of Finance,” said a spokeswoman. The bioenergy association has also mounted a lobbying campaign to persuade the Government to exclude the biofuels components of blends in the Finance Bill. That legislation, which gives statutory effect to budget decisions, is due to be published next week.
Tom Bruton of the association said that the tax was inequitable as it gave no credit for biofuel content.
“While clearly Government policy acknowledges that biofuels lead to a net reduction in our transport carbon footprint, this latest diktat makes a mockery of the notion of a smart green economy,” said Mr Bruton.
The New Ross-based Green Biofuels Ireland (GBI), Ireland’s largest biodiesel plant, also described the tax as a serious anomaly, saying it was unfair to treat blends with less than 10 per cent biofuel exactly the same way as conventional petrol and diesel.
The company’s managing director Nick Tierney said the decision was wrong and unfair. He pointed out that most diesel blends contained between 4 per cent and 7 per cent biodiesel. He argued that the Government, by setting a limit of 10 per cent, was giving no advantage to biofuel producers or to consumers choosing biofuel blend.
“We produce 30,000 tonnes of biofuels annually in our plant. This output reduces carbon emissions by 90,000 tonnes every year,” he said.
Seán Connick, a Fianna Fáil TD based in New Ross, said: “Green Biofuels is an indigenous Irish company, which has a €23 million plant, and employs 23 people locally.”