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Government U-turn on climate action funding after complaint to EU

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CEO of Fuels for Ireland Kevin McPartlan

CEO of Fuels for Ireland Kevin McPartlan

CEO of Fuels for Ireland Kevin McPartlan

Future payments into the €500m Climate Action Fund (CAF) have been plunged into uncertainty after the Government rolled back on plans to pay for it through a levy that makes motorists pay 2c per litre on fuel.

The Irish Independent can reveal the Government has done a U-turn on plans to resource the fund exclusively through the National Oil Reserves Agency (Nora) levy after a complaint to the European Commission.

Fuels for Ireland, a group representing Irish oil retailers and distributors, lodged a complaint alleging that Government policy on funding the CAF breached EU state-aid rules.

The complaint prompted an inquiry by the Directorate-General for Competition, the EU body responsible for competition and anti-trust law.

In response to the complaint, the Government submitted that its use of the levy did not constitute state aid, and even if it did, it was not in breach of internal market rules.

Fuels for Ireland claimed that by exclusively using surplus Nora levy funds, the Government put in place a “discriminatory fiscal measure” that gives competitive advantages to rival non-renewable energy suppliers involved in gas, solid fuels and electricity.

In response to the competition authority inquiry, the Government later changed its position and stated that other sources would finance the CAF.

However, no other potential funding options have been identified or published by the Department of Environment Climate and Communications.

The department did not immediately respond to a request for clarity by the Irish Independent.

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As revealed by the Irish Independent, a promise to cut the Nora levy to 1c from 2c per litre was not proceeded with by the department.

The failure to deliver the cut in fuel prices promised last November by Transport Minister Eamon Ryan has cost motorists around €25m so far this year.

The Nora levy is applied to home-heating oil, and petrol and diesel used for motor vehicles.

This money funds the operating costs of the Nora, which maintains Ireland’s international obligation to stockpile 90 days of oil reserves in the event of a disruption to supply.

Fuels for Ireland said the levy has so far generated a surplus of about €300m, and an amendment to legislation last year allowed that money to be diverted to the CAF at the discretion of the minister.

The CEO of Fuels for Ireland, Kevin McPartlan, welcomed the Government U-turn, saying it was pleasing to note that consumers of liquid fuels “will not be expected to carry the entire burden” of funding the CAF.


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