Annual carbon tax hikes on cards from 2020

Carbon tax hikes every year will be considered after an energy report warned that a third of all electricity demand here in future is set to come from data centres and large energy users.

Energy Minister Richard Bruton said he is “open” to considering annual hikes in carbon taxes and confirmed upward changes to the levy will be considered for the 2020 budget.

He said it was a matter for the minister for finance but that it was a “trajectory” that he and the Taoiseach had said should be put in place.

“That won’t happen this year but that it will be one of the issues considered in the 2020 Budget,” he said.

Mr Bruton was speaking as a review of the country’s energy needs by the International Energy Agency (IEA) called for annual increases in carbon taxes. It called for an “automated upward adjustment” of the tax “when preset sectoral emission targets are not met”. Mr Bruton said he was “open” to considering this proposal.

The IEA also proposed that carbon taxes differ for sectors. However, Mr Bruton does not favour this approach.

“It is clear a price increase on carbon should impact on all sectors where carbon is used as an energy source,” he said. “And that should be uniform.”

The IEA said Ireland needs to develop a roadmap for decarbonising the residential heating sector, as 90% of homes still rely on fossil fuels. More government-driven policy changes should support switching fuels, the IEA said, particularly for the rental sector.

Ireland would be “miles off” reaching a 20% cut in greenhouse gas emissions targets by 2020, said IEA deputy executive director Paul Simons. It would also be a “challenge” to cut emissions by 30% by 2030, he said.

While gas supplied half of all Irish electricity, more security of that supply was needed, the report said. Particularly if Ireland continues to plan to phase out electricity supply from coal by 2025 and from peat by 2030.

The IEA report says that electricity demand from large data centres and other large energy users will make up almost a third of electricity used by 2027.

Both Green Party leader Eamon Ryan and Friends of the Earth criticised IEA recommendations to prioritise gas infrastructure and security in future years.

While noting that around a quarter of the country’s energy needs currently come from wind power, the IEA said this will rise in the coming years.

The IEA also noted that, with a rising population and therefore increasing energy demands in the coming years, we would need to meet future needs increasingly through low-carbon and energy-efficient solutions.

“Building on this success, we advise the Government to urgently implement additional measures and monitor their progress to get the country back on track to meet its long-term climate targets,” Mr Simons added.

Ireland became a founding member of the IEA when it was set up in 1974. The IAE is an agency of the OECD.

Meanwhile, People Before Profit launched a minority report on the Oireachtas Climate Action review, opposing carbon charges on households.

Brid Smith said there should be a carbon tax on the profits of fossil fuel companies, food production companies and industries that release large CO2 emissions and that her party opposed a carbon tax on ordinary people who have “no alternative to the use of carbon”.