It was hard to agree at its inception and tough to defend since, but in the end the efforts this Government and the previous one put into holding firm on the carbon tax were easily abandoned.
Minister for Finance Simon Harris walked back years of embedding the polluter-pays principle into public policy by reversing some of the most recent carbon tax increases and freezing others.
“[Carbon tax on home heating fuels] will not increase again in the lifetime of this Government,” he said.
“The changes do not in any way signal a weakening of our resolve to decarbonise the economy,” he also said.
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He did not see a contradiction in those two statements, unlike environmental and climate non-governmental organisations (NGOs), who saw nothing but conflict in them.
While the Government justified the move as providing much-needed relief to households struggling with rising energy prices, Friends of the Earth said it was designed primarily to provide “political relief” for a Government struggling with falling public support.
“Fuel-tax cuts do nothing to insulate families from global fuel shocks in the long term, while simultaneously draining the exchequer of the funds needed to get off fossil fuels for good,” said Clare O’Connor, the group’s programme coordinator.
Oisín Coghlan, policy adviser to the Irish Environmental Network, had a similar reaction.
“We need to accelerate supports to get people off fossil-fuel home-heating. And the Government will now have to use more non-carbon tax revenue to do that.”
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Green Party leader Roderic O’Gorman said Harris had written off four years of carbon tax revenue without giving any indication how the hole would be filled.
He said the funding announced for the national retrofit scheme was just €14.5 million more than last year, an increase so small it was “laughable”.
The Department of Climate, Energy and Environment didn’t find that funny, insisting the increase was closer to €100 million, but it seems there are different ways of counting – and announcing – allocations.
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O’Gorman linked the “tinkering around the edges” climate budget directly to the fall-off in carbon tax revenues the Government had now walked itself into.
This “does not show a Government serious about transitioning away from fossil fuels and making renewable energy easily available for all households”, he said.
The fall-off is serious, however: €25 million this year and €177 million in each full year to follow. Even for a tax that was due to bring in over €1 billion in revenue this year, that’s a considerable loss.
The U-turn on carbon tax also presents wider difficulties for Government policy.
The Tax Strategy Group, an interdepartmental group of senior civil servants and advisers, examined the tax in their pre-budget analysis.
“The carbon tax trajectory is an important part of Ireland’s overall commitment to tackling climate change and has provided a clear long-term signal to industry and society of the need to decouple from our reliance on fossil fuels,” they said.
“It has been positively referenced in international forums as a clear, unambiguous and, when combined with the ring-fencing, progressive transition measure.”
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Veering off that trajectory suggests a dent in Government commitment, a fuzzying of the signals and a reversion to regressive measures.
Minister for Climate Darragh O’Brien insisted the decision was “not taken lightly” and did not indicate any lack of commitment to the energy transition.
But while the treatment of home-heating fuels has gone back in time, the deferral of the increases on petrol and diesel are only until next year, when two hikes will be due.
Having walked back on the tax this budget, the pressure will be on to remain in reverse gear next year.
