Seán Healy: 'We can't have a sustainable economy without better taxes and incentives to save our planet'
Ambition and leadership are required to move Ireland's economy and society to a sustainable footing and deliver on our national ambition for a low-carbon future.
Is the Government up to the task? Despite the fanfare surrounding the launch of the Climate Action Plan 2019 and welcome headline policies on retrofitting, Just Transition and energy efficiency, there has been little in the way of real implementation. In fact, the recent confusion regarding the SEAI Deep Retrofit Scheme and the lack of a scaled-up, nationwide programme to replace it, is a prime example of how little progress we are really making towards our climate commitments.
Later this month Ireland will attend the UN Climate Action Summit and the Government will be asked to outline the concrete social, economic and environmental policies it will implement to progress climate action, to reduce our emissions and to meet our international commitments. A coherent environmental tax policy is an obvious first step on this road.
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Our environmental tax policy as it stands is certainly not coherent; nor is it having the impact that it should have on behavioural change, promoting environmentally friendly alternatives and implementing the 'polluter pays' principle.
The Central Statistics Office (CSO) estimates that, between 2012 and 2016, €4bn per annum was forgone through potentially environmentally damaging subsidies. In 2016 alone, €2.5bn went in direct subsidies and preferential tax treatment supporting fossil fuel activities in Ireland, and a further €1.6bn supported other potentially environmentally damaging activities in the agriculture, transport and fisheries sectors.
The CSO also compares the amount collected through environmental taxes, such as the plastic bag levy and carbon tax, and the revenue forgone through potentially environmentally damaging subsidies. It found that, in 2016, €5.1bn was collected in environmental taxes, and €4.1bn was forgone.
In other words, potentially environmentally damaging subsidies, equating to 80pc of revenue collected through environmental taxes, such as the plastic bag levy or carbon tax, was forgone in 2016. These subsidies completely undermine the impact that our environmental taxes might have because they support activities that lead to increases in our emissions and prevent us from meeting our renewable energy and emissions reduction targets. In fact, they will lead to increased costs for each and every one of us as the State will have to buy carbon credits at a cost of up to €150m annually from 2020 for missing these targets.
At a time when the Government looks set to increase the rate of carbon tax in the forthcoming Budget, and when Ireland continues to be among the worst countries in the European Union in terms of meeting our climate targets, how is it that we are losing over €4bn per annum to subsidise potentially environmentally damaging behaviour?
A coherent environmental tax policy would end environmentally damaging tax breaks and invest this money into the people, communities and regions that will be most affected by climate adaptation and the changes that we must make to meet our national climate targets.
Such a policy would support mitigation and transition to a sustainable, low-carbon economy and society.
That €4bn a year would go a long way to supporting a Just Transition fund for low-income households and households in rural Ireland that will be most affected by the implementation of necessary changes to support climate action. It would certainly fund a large-scale national deep retrofit programme to deliver on the Climate Action Plan target of retrofitting 500,000 homes.
If we really want to encourage behavioural change and reward activities that are not environmentally damaging, then we have to ensure that every household, especially those in rural areas, those on low incomes and those in energy poverty, can access alternatives such as climate-efficient public transport and energy-efficient home heating. The Government must invest in policies that promote retrofitting and renewable energy and ensure that alternatives are available to people.
A coherent environmental tax policy would ensure that people and communities are supported to make the required changes outlined in the Climate Action Plan. It would look at how our taxation system can support behaviour that enhances and protects our natural resources, and it would ensure that goods and services reflect their true environmental costs. It would not subsidise activities that lead to increased emissions; instead it would invest this money into retrofitting, delivering energy-efficient public transport nationwide and addressing energy poverty.
Eliminating harmful environmental subsidies and devising a coherent environmental tax policy would show that the Government is committed to reducing emissions and that it has the leadership required to implement the brave social, economic and environmental policies needed to realise our ambition of a low-carbon, sustainable economy and society for current and future generations.
We know that we can develop good policy in Ireland; our challenge has always been in implementing it. There will be intense lobbying from many vested interests; this must be resisted at a political level. If this Government is to truly deliver on "our call to action in the fight to save our planet", as An Taoiseach describes the Climate Action Plan, then a coherent environmental tax strategy is a good place to start.
Dr Seán Healy is CEO of Social Justice Ireland