Irish business takes swipe at energy taxation

Industrial energy levies would harm competitiveness without cutting emissions, says association

Ireland's main industry association yesterday launched a pre-emptive strike against possible new industrial energy taxes, publishing new research showing they would damage business competitiveness without significantly cutting emissions. The government is due to publish a greenhouse gas abatement strategy next month, and made clear last year that it was in favour of using economic instruments, possibly including taxes (ENDS Daily 23 September 1999).

A consultancy study prepared for the Irish Business and Employers Association (IBEC) reviewed four models for introducing industrial energy taxes. These were: the ill-fated European Commission proposal for an EU carbon tax, abandoned in 1996; the current EU proposal for minimum tax rates on energy products; an energy levy of 7.6% on all energy inputs; and the original version of the UK's industrial energy tax, before business protests led to this being softened.

According to the study, none of the proposals would cut more than 0.26% off national greenhouse gas emissions at their 1997 level. This marginal reduction would cost euros 138-470 (I£109-370) per tonne of carbon dioxide, well above projected costs for other measures. IBEC claims these costs would "adversely affect" over 40 sectors of Irish industry, accounting for 75,000 jobs.

Under the Kyoto climate protocol, Ireland is committed to limiting growth in greenhouse gas emissions to 13% between 1990 and 2008-2012. In practice, they have already passed this level and are projected to rise to 25% above 1990 levels by 2010, fuelled by massive economic growth.

* In a related development, Ireland's environment and energy ministers have jointly urged local authorities to establish energy management agencies to promote efficiency and renewables. There are currently only nine such bodies in the country, all of them part-funded through the EU energy efficiency programme Save. Noel Dempsey and Joe Jacob said in a statement that they had written to local authorities "encouraging them in the strongest possible terms" to apply for EU Save funds to create new energy management agencies.

Follow Up:
IBEC, tel: +353 1 660 1011. The study is entitled "The Competitiveness and Environmental Impact of Energy Taxation on Irish Industry". See also local energy management agency press release.

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