Motorists to feel effect of carbon tax rise first as full impact will not be felt until next year
THE Government’s first green Budget takes effect immediately with price increases for motorists at the fuel pump – but the full impact will not be felt until this time next year.
A widely predicted €6 increase in the carbon tax was applied from midnight to petrol and diesel, adding roughly 2c to a litre, or €1 to a 50-litre tank fill.
The increase does not apply to heating fuels until next May, however, avoiding a likely backlash when the cold winter sets in.
When the tax does expand its reach, the increase will add about 70c to the price of a 40kg bag of coal, 15c to a bale of briquettes, and €15 to a tank of home heating oil.
Most householders will be spared the extra cost until after the summer, and there is a €2 increase in the weekly fuel allowance coming into effect immediately to take the edge off it, but when it does begin to hit pockets, another budget and another increase of around €6 will be looming.
The staggered introduction of the tax over the coming year means it will generate revenue of around €90m compared with the €130m expected if it was levied in full.
There are already competing demands on that pot, onethird of which is earmarked for ‘just transition’ measures to support workers in the midlands facing the loss of their jobs in peat-related industries.
A new Just Transition Fund is to be established with a starting budget of €6m for retraining workers and other measures to be agreed with trade unions and local community groups and businesses.
A just transition commissioner is also to be appointed to oversee the effort, although the exact job specification, term of appointment and salary have yet to be finalised.
A sum of €5m will go to bog restoration and rehabilitation schemes with the dual purpose of returning the bogs to a state where they act as natural carbon sinks and provide 70-100 jobs in the process.
The biggest allocation of €20m will be used on energy efficiency upgrades to social housing in the midlands.
The aim is multifaceted. It is expected some 400 jobs can be created by the scheme which will also have the benefit of improving living conditions and cutting heating costs among low-income households in the area.
But the initiative is also to be used to develop a model for rolling out bulk upgrades in groups of houses that will allow for economies of scale and lower costs in both public and privately owned estates throughout the country.
What’s left of the carbon tax revenue will be split on a range of measures including increasing the availability of grants for the purchase of electric vehicles and the number of charging points in public and communal settings. Other projects to benefit will include new greenways and urban cycle paths and sustainable agriculture initiatives.
Reaction to the carbon tax increase was mixed. Seamus Boland, CEO of Irish Rural Link, said it would have a disproportionate effect on rural dwellers.
“The increase in the fuel allowance will not combat the impact of the increase in carbon tax because many households don’t qualify for this allowance,” he said.
“Carbon tax will not change behaviour because alternatives are not available or affordable to many in rural Ireland.”
The Environmental Pillar, a coalition of 30 national environmental groups, had called for a €20 increase in the carbon tax and said €6 could be counterproductive.
“The marginal increase in fuel price is too little to change behaviour and bring down emissions yet enough to raise concern among the wider public already suspicious of the tax,” it said.
The Irish Petrol Retailers Association said the increase was acceptable as it was modest and global oil prices had reduced in recent times.
Climate Action Minister Richard Bruton said the increase was chosen to allow for steady increases rather than occasional shocks.
“I am acutely aware of the impact that moving away from fossil fuels will have on some people. Just transition and protecting the most vulnerable is at the heart of the climate action plan. Budget 2020 will support those most affected.”