A carbon charge will help Ireland tackle global warming, move us away from an overdependence on imported oil and broaden our tax base says Ciarán Cuffe, Green Party TD

As an environmentalist, I’m guided by the principle that the ‘polluter pays’ and charging for the carbon that is polluting our atmosphere is a useful way of focussing our minds on how we can adapt our behaviour to live in closer harmony with the Earth’s natural resources.

When you use electricity to charge your phone or watch TV, you are already paying an implicit carbon charge. Our electricity utility companies are part of Europe wide scheme to reduce emissions. A carbon levy in Ireland will have a similar effect by putting a charge on certain fuels, such as petrol or home heating oil, proportionate to the amount of CO2 that is produced when the fuel is burnt. The more carbon contained, the more the charge.

This will make those fuels which are most harmful to the atmosphere more expensive to consume, helping us meet our climate change targets of reducing emissions by twenty per cent by 2020. It will also create incentives for new businesses to create low carbon technologies and improve energy efficiency which will gradually wean us off our huge reliance on imported oil. Such a levy will also bring stability to our tax base and ensure we’re not as susceptible to the sharp decline in the monies used to pay for Government services.

So how much will a new carbon levy cost? A levy at, say, €20 a tonne of carbon will add five cents to a litre of petrol for example. The ESRI estimate it will add between €3.50 and €5 a week for households. Whilst this isn’t a massive amount it’s important the effects on the most vulnerable in society are mitigated.  The carbon levy will generate monies that go toward insulating homes, alleviating fuel poverty and providing better public transport.

Per capita, Ireland still ranks as the one of the highest emitters of carbon dioxide in the world. Aside from the moral argument that it’s incumbent on each of us to play out part in solving this global problem, we will be faced with hefty financial penalties as part of any post-Kyoto deal requiring emission reductions. So it makes financial sense to put policies in place now that move us in the direction of a low carbon economy.

The world’s finite oil supply is another looming problem. Slowly but surely, we’re running out of the stuff. Estimates as to when this will occur vary but as the International Energy Agency has pointed out, “the era of cheap oil is over”. A carbon levy can be used to change household and business behaviour, incentivising greater energy efficiency in our homes and the use of cleaner, greener technologies that will lessen our energy dependence.

The difficult decisions that will be announced in today’s budget are in part attributable to the fact that we are too dependent on transactional consumption taxes like stamp duty and VAT to pay for the services the Government provides. When the economy slows drastically, so does the revenue from consumption taxes. A carbon levy will broaden this tax base, stabilising the source of money used to pay for State services. In contrast to income tax, which as a tax on labour can have the effect of discouraging employment, a carbon levy ‘taxes the bad stuff’ so to speak and will gradually move us toward low carbon alternatives.

New taxes are never popular, but like the plastic-bag levy, a carbon levy has a clear environmental goal as well as being in the long term economic interest of the country.