Gormley commits Ireland to 80% emissions reduction by 2050

Carbon Budget 2010: Minister Gormley's speech to Dáil Éireann
Click here for the Framework for Climate Change Bill 2010

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A Cheann Comhairle,

It is a privilege to present to the House this, the third annual Carbon Budget. Since this process commenced two years ago the Carbon Budget has continued to evolve and climate change is now very much at the heart of the Government's budgetary policy and decision making.

This Carbon Budget comes at a crucial time not just for Ireland but for humanity in terms of our efforts to tackle climate change. The next seven days will be a make or break as the nations of the world gather together in Copenhagen in an effort to reach a political deal on climate change, one which we all hope will lead to an early, legally binding international treaty.

The science demands action, the economics support it and future generations depend on it. We must strive to address one of humanity's greatest challenges in limiting and adapting to climate change; failure to do so could have catastrophic consequences.

A global deal on climate change is not just necessary for other countries, it is also vital for Ireland. At home we have seen the loss and suffering that scores of families have endured during the recent flooding. I have seen this at first hand. While we must not infer too much from once-off events, these floods are in line with the scientific predictions of the impacts of climate change in Ireland.

There is a clear lesson here: if we don’t prepare properly for the climate change impacts that are already occurring and which will intensify over the next number of decades the long-term costs to the exchequer and to society in general will be immense.

To the scores of families who have been inundated with flood waters and the huge physical and emotional toll that comes with it, we have offered urgent assistance in the form of the €70m for flood relief and humanitarian assistance as provided in Budget 2010.

We must also learn hard lessons from what has happened. The questionable nature of some development decisions in the past couldn’t have been more clearly demonstrated. We have to stop putting residential developments in flood plains. We must ensure that a climate change impact assessment is taken into consideration in all planning decision-making and this will be done through my new Planning Bill.

It is also a time of great economic challenge and in Budget 2010 the Government has faced up to the huge challenges we face as a country and outlined our strategy towards addressing the fiscal deficit and restoring stability and growth to our economy.

This Government took some very tough decisions, and made some very difficult choices, but we did so in the interests of the entire country and its citizens, and their long-term futures.

The challenges of climate change and of moving to a low carbon society are equal to that of economic recovery.

Indeed they are intrinsically linked to our future economic well-being. Reducing our emissions will involve difficult choices and difficult decisions, but the benefits of a low carbon competitive economy and society will greatly outweigh the costs.

Nor can we achieve this aim overnight, but the decisions we make now on emission reductions will have benefits for decades to come.

As the Action Group on Green Enterprise reported recently, moving to a low carbon society will create upwards of 80,000 jobs over the coming decade.

The report advocates the establishment of a Green IFSC, and last Friday I met with promoters of this concept. The Greens in Government will be moving on this measure. We will also be acting on introducing a Green procurement system for the public sector, which will drive this sector.

This year we are laying two of the corner-stones of Ireland’s efforts on climate change. They will shape and drive the national effort in the years ahead

The first is the carbon levy, which was announced on Wednesday by the Minister for Finance.

Today I am publishing details of the second cornerstone, a Framework for the Climate Change Bill 2010 which outlines the key provisions to be included in this new legislation.

CARBON LEVY

No tax has been subjected to the level of consideration and economic analysis as the Carbon Levy. It is finally here even if it is long overdue as I stated in this House on Wednesday. It is something that I and my party have been pushing for over many years in this House. As a principle it is broadly accepted by most economists and analysts as the most cost efficient way to reduce emissions and its introduction is a landmark step in integrating climate change into the annual fiscal budgetary process. The rationale behind the Carbon Levy is to change the relative price of fuels based on CO2 emissions in order to change consumption patterns, encourage fuel efficiency and lead to an improvement in environment quality.

The benefits of such a tax have been outlined in the report of the Commission on Taxation; in my contribution to the Budget debate yesterday I emphasised the importance of putting a price on carbon which will raise revenue that can be channeled into making our economy and society more energy efficient. The introduction of the Carbon Levy is central to our continued efforts to move towards a low-carbon economy.

It is part of a gradual and expanding process; in previous Budgets we took steps to tailor our Vehicle Registration Tax and Motor Tax so as to provide people with the choice to help the environment and to take greater account of CO2 emissions.

Of course, the Carbon Levy will have an impact on the various domestic fuels used in Ireland and the Minister for Finance yesterday gave details of the phasing in of the tax across the various fuel categories.

The yield from Carbon Levy for all energy products is expected to be €250 million in 2010, and €330 million in a full year.

We are channeling this money into making this country more energy efficient, and to boost the economy and employment.

We will use €130 million of the money to retrofit homes around the country.

My colleague the Minister for Communications, Energy and Natural Resources Eamon Ryan will launch a national retrofit programme in 2010 with a budget of €90 million of which €36 million will be ring-fenced for retrofitting households in energy poverty. This represents more than double what was allocated for the same measures in 2009 and a seven-fold increase on 2008 allocations.

My own department will launch a €40 million retrofitting programme for social housing, which I will outline in detail later.

This money will have the effect of greatly improving comfort levels, protecting the health of occupants as well as reducing the carbon footprint of thousands of households across the country. It will also create and sustain in excess of 6,000 jobs in the construction sector.

Because of the revenue from the Carbon Levy, we have also been able as a Government to provide a €36 million PRSI exemption for employers who take unemployed people off the dole. It has also enabled us to reduce VAT rates.

In terms of the effects on emissions, I believe that the Carbon Levy will reduce emissions in the non-traded sectors of the economy by 750,000 tonnes between now and the end of 2012. This will result in an average reduction of 150,000 tonnes per annum over the period 2008-2012, or 250,000 per annum in a full year.

Transport

The Transport sector will be impacted more than any other sectors due to the importance of the relative price difference between Ireland and the UK. The Government has published a new transport policy, Smarter Travel: A sustainable transport future. It sets out a clear path to significantly reducing emissions in the transport sector by 2020.

Smarter Travel will promote a more sustainable transport system that encourages more active modes of travel, improving local towns and community space, reducing congestion, and delivering significant health benefits.

The Renewed Programme for Government similarly emphasised the importance of investment in public transport and in incentivising the behavioural change that will deliver a more sustainable transport future for all of us. This emphasis has been seen very clearly in this year’s budget. Despite the very difficult financial backdrop, key public transport projects are being continued, to ensure continued enhancement of rail services, particularly to support commuters, and on giving increased priority to buses in Dublin and other cities. The completion dates and appropriate road standard of the remaining 94 road projects at the design stage or earlier stage of development will be reviewed in light of the economic circumstances, falling road usage and our climate change objectives.

Changes in other sectors will be more gradual. Investment in more efficient capital stock is strongly incentivised by carbon taxes, but these changes take place over much longer time frames than a single year. I believe that it will take time for a Carbon Levy to have its full impact on behaviour, but we now have a very positive starting point.

The second pillar of our ambitious approach to climate change is the proposed overarching climate change bill which I will bring forward in 2010. I have circulated a document entitled, Framework for the Climate Change Bill 2010, which outlines the key provisions on which the detailed Heads of the Bill will be based. I should stress that work on developing the Heads continues apace and I hope to be publish the Heads before the end of the first quarter of 2010.

This legislation marks a key milestone in the battle against climate change and the legislative proposals contained in the document will shape and drive our efforts in tackling this core national priority. These provisions are a mark of our intent and ambition in this area and include:-

• enshrining, for the first time, in national primary legislation key policies and principles which will guide and drive our climate change agenda into the future;

• setting, also for the first time, ambitious statutory targets which include
  • a 3 per cent average annual reduction in net greenhouse gas emissions as outlined in the Programme for Government, but extended out to 2020, and
  • an eighty per cent reduction on 1990 levels of greenhouse gas emissions by 2050;

• Enabling provisions will be included to allow these targets to be amended following the advice of the Climate Change Committee and in line with the evolution of scientific knowledge and international commitments;

• Placing the National Climate Change Strategy on a statutory basis on the basis of a five year cycle with the first two strategies to run from 2011-2015 and 2016 to 2020

• Placing the carbon budget process on a statutory basis based on a multi-annual approach as outlined in the NCCS

• Placing the National Climate Change Adaptation Strategy on a statutory basis, following its publication next year.

• Establishing a high level group of experts under a Climate Change Committee which will be supported by a new Office of Climate Change to be located in the EPA; and

• Developing a system of monitoring and reporting which will impose statutory obligations on Government Departments and public bodies.

This legislation will be the cornerstone of our efforts in meeting ever more demanding national and international obligations post-Kyoto.

Emissions and Other Issues

Analysis of the latest greenhouse gas emissions data which has now been produced by the EPA and developments in other relevant areas relating to the Carbon Budget are set out in the Appendix to this statement. I have also circulated tables showing the key measures introduced by this Government since 2007 and an updated Table setting out the trend in GHG emissions in Ireland based on provisional estimates for 2008.

The colder winter of 2008 led to a rise of 8.7% in emissions in the residential sector over 2007. While gross emissions fell slightly, the figures show that the deceleration of emissions due to contraction of the economy may not be moving as quickly as had been anticipated. We need to bear in mind that 2008 is the first year of the Kyoto period and we still expect this deceleration to continue until 2010. Any such trend serves to underpin and underline the need to intensify our response to dealing with our emissions and to achieve the reductions that we so desperately need. It also underscores the importance of moving ahead with the two headline initiatives represented by the Carbon Levy and the Climate Change Bill.

Social Housing

All social housing is also required to meet more exacting standards of energy performance and it is important to ensure that the tradition of high quality construction standards in public housing continues and that new social housing construction is at the forefront of our efforts to move to the next level of energy efficiency standards. This year, I approved eight Towards Carbon Neutral demonstration projects which will go beyond even the proposed 2010 standards, delivering a minimum BER of A2. €20 million is being set aside over the next two years to support projects in this area and I will be seeking to ensure that the learning derived from these projects will be mainstreamed into the social housing construction programme generally.

Existing Social Housing

The scale of the existing public housing stock – at around 145,000 units - and the varying levels of performance within that overall stock demand that we look to deliver very significant energy efficiency improvements here also. And, of course, we have, over the last number of years, made considerable strides in this area through the impact of significant remedial works and regeneration programmes.

I propose to expand our involvement in this area of work and therefore earmarked €20 million within the 2009 Social Housing Investment Programme to commence work on an energy efficiency retrofitting programme for the local authority housing stock, generally seeking to achieve C1 Building Energy Rating.

The importance that I attach to activities in this area is underlined by the fact that funding for energy efficiency measures in the public housing stock will increase significantly next year, with more than €40 million being provided. In parallel, the Department is developing a ten-year strategy with the objective of achieving the full retrofitting of the social housing stock. This strategy is to be completed in the first half of next year and will provide a road map for the delivery of the programme over the next decade.

Audit of the Stock

The retrofitting strategy will also be informed by a comprehensive review of the condition of the public housing stock. This National House Condition Survey is designed to examine, among other issues, the age and condition of the dwelling, its energy rating and the type and extent of central heating, insulation and other efficiency characteristics. The survey is being carried out in a number of phases - phase one, involving a review of the relevant information currently held by local authorities, is already complete and the planning for subsequent phases is underway with a view to commencing phase two early next year.

Conclusion

With the Carbon Levy and the Climate Change Bill we are setting out our stall in terms of our ambition as a nation in combating climate change. We are sending out a message to people here and beyond our shores of our intent, our determination, our sense of purpose in tackling climate change.

It is a message that I am proud to take to Copenhagen.

Thank You.