Budget 2020: what does it mean for the climate?

By Padraic Daly

Minister for Finance Paschal Donohoe has announced new measures in the 2020 Budget to reduce Ireland’s contribution to the current climate crisis.

In the Dáil on Tuesday morning, Minister for Finance Paschal Donohoe delivered his speech on the package, describing climate change as being “without doubt our defining challenge.”

The Minister announced a €6 increase on the carbon tax, applicable to fuels including petrol and diesel. These changes were implemented from midnight on Tuesday, but the increase to other fuels will follow in May of next year, after the winter heating season. The Government ultimately intends for the tax on carbon to rise from €20 in 2019 to €80 in 2030.

Minister for Finance, Paschal Donohoe
Photo Credit: Wikimedia Commons

The Minister said this will raise €90 million, which will be ring-fenced for the funding of “new climate action measures”.

A portion of the revenue gained from the carbon tax will go towards funding a package targeted at the midlands. The Minister said, “€20 Million will be dedicated to the creation of a new energy efficiency scheme targeted initially at the social housing stock in the region. This aims to create new, sustainable employment in the region.”

The €6 million will go towards the Just Transition Fund, targeted at The Midlands to re-skill workers and assist local communities and businesses in The Midlands. €5 million will also be dedicated to restoring bogs to their natural habitat. The bogs will become “carbon sinks”, which will be able to absorb carbon.

Another €5 million will go towards the reduction of greenhouse gas emissions and enhanced biodiversity.

The earnings from the carbon tax increase will also include €11m for electric vehicle grants and charging networks – which will double the number of electric car charging outlets currently available to the public, as well as €9m for greenways.

“little more than a government cash-grab dressed up as a green initiative”

AA Roadwatch has warned that the carbon tax increase will do very little to reduce Ireland’s over-reliance on the private car, criticising the move as “little more than a government cash-grab dressed up as a green initiative.”

Director of Consumer Affairs for the AA, Conor Faughan stated: “Investing in public transport infrastructure, LUAS-like systems across our main cities, quality cycle lanes, all these measures would do far more to get people out of the car than a tax increase ever will.”

The 1% diesel surcharge has been replaced with a nitrogen oxide emissions charge. This will apply to new cars registered from January 1st of next year. The charge will apply on a euro per milligram/kilometre basis with the rate increasing in line with the level of nitrogen oxide emitted. The first 60mg per kilometre of nitrogen oxide emissions will be charged at €5 per milligram. Above 60mg per kilometre, the charge will amount to €15 per milligram. Above 80mg, it will be €25.

This means a new diesel car with emissions of 43mg per kilometre will have a charge of €215 added. A new petrol car with emissions of 23mg per kilometre will have a charge of €115.

“The Government ultimately intends for the tax on carbon to rise from €20 in 2019 to €80 in 2030”

The Government is aiming this charge at older, more polluting cars, which could cost some owners several hundred euros. This charge will not affect electric vehicles, as they do not directly emit nitrogen oxide. €8 million has been reserved for grants awarded to consumers who purchase fully electric cars.

Contrary to this, the Government is scrapping the grant scheme for businesses who purchase electric vehicles.

Richard Bruton, Minister for Communications, Climate Action & Environment said in a statement, “the generous benefit-in-kind tax relief that is available for these vehicles is considered adequate incentive to drive growth in this sector.”

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