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Budget 2010: Carbon tax welcome; car scrappage scheme misguided, wasteful

9 Dec 2009

Carbon tax welcome, but too low and no reason to exclude big polluters

Car scrappage scheme misguided, wasteful

Where is the promised carbon audit of capital spending?

Finance for retro-fitting, electric cars weclome

Friends of the Earth has welcomed the introduction of carbon tax in today's Budget, while criticising the exemption of big polluters, and claiming that the tax level falls far short of what is needed to reflect the damage carbon pollution does. The other measures with an environmental impact are a mixed bag according to the environmental organisation.

Welcoming the carbon tax, Friends of the Earth Director, Oisin Coghlan said

"Putting a price on carbon is an important step in the fight against climate change. Friends of the Earth welcomes the fact the Government has finally decided to introduce a carbon tax. It is particularly welcome that the Minister indicated that the revenue will be used to reduce payroll taxes and finance rural transport and energy efficiency".

The environmental organisation has a number of concerns about how the Government plans to implement the tax. Commenting Mr Coghlan said:

"It is lamentable that the Government plans to exempt big polluters from the carbon tax. They will tell you it's because these companies face a carbon price through the European ETS. In fact we all know they got almost all their pollution permits for free. That didn't stop them raising prices to customers to reflect the market value of the permits. Until they have to buy the permits at auction they should pay the carbon tax like everyone else".

"How does the Government expect ordinary taxpayers to accept a carbon price, however low, while big polluters get a windfall profit from the emissions scheme?"

"There must be absolute transparency in how the revenue is used in order to re-assure people that the revenue is used to reduce other taxes or ring-fenced to finance the transition to a low-carbon economy and society".

"€15 a tonne is far lower than is necessary to drive the transition to a low-carbon future. The tax will need to increase year-on-year until it fully reflects the damage carbon pollution does. As it rises towards €100 a tonne and beyond the measures to ensure the tax is fair and revenue neutral will need to be beefed up."

On other measures in the Budget, the environmental organisation commented:

* The car scrappage scheme is a waste of money and will not have a significant effect on emissions. Most of the money will go to overseas manufacturers and each new car represents two to three years of pollution before it even hits the road. It would have been far better to wait until the infrastructure was there to allow electric cars go mainstream. That would have been the moment for a scrappage scheme to drive a big switch to electric cars. Instead this will lock drivers into another generation of petrol cars.

* There is no sign that the re-prioritisation of capital spending has been subjected to the carbon footprinting that was promised in the 2007 Programme for Government. Without a comprehensive and transparent cost-benefit analysis that includes a realistic shadow price for carbon we risk further capital spending on fossil-fuel dependent infrastructure such as airport expansion and new ports, locking ourselves into a high-carbon future.

* The increased funding for retro-fitting homes is welcome but a lot more needs to be done in this area.

* The continued relief on the purchase of an electric cars is welcome, now the urgent thing is to ensure the roll out of the re-charging infrastructure.

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