Will Cowen’s first ‘Green’ Budget bring about real change?

WHEN the Green Party crossed the Rubicon to enter Government, the party’s leadership justified its decision to enter coalition with Fianna Fáil on two grounds — that it had the two ministries closest to its ideological heart (environment, and energy and natural resources) and that it had won major commitments that would lead to real reductions in carbon emissions.

The main Green inclusions in these areas to be found in the Programme for Government are:

A reduction of 3% on average (15% by the end of 2012) in our greenhouse gas emissions.

An annual report from John Gormley setting out progress on meeting those targets.

A third of electricity from renewable sources by 2020.

New bodies. A cabinet subcommittee, an Oireachtas committee and a high level commission. Each of them focused on climate change

A special “carbon budget” to be presented by the Minister for Finance each year.

What to watch out for:

The Carbon Budget

For the first time, Brian Cowen has devoted a large section of his budget to the environment. It has been much easier for him this year as it is the first year so there are no targets to be missed. He essentially outlined Ireland’s overall figures for carbon emissions and where we will need to go in the next five years.

And today Environment Minister John Gormley will follow it up with a statement outlining our use of energy in the preceding year, and specifying the plans that will be need to meet the target in 2008.

According to Friends of the Earth, this year’s greenhouse gas emission will equate to 70 million tonnes, so the carbon budget for next year will need to commit Ireland to emit no more than 68 million tonnes.

Vehicle Registration Tax (VRT) and Motor Tax

Brian Cowen is usually tight with his information. But the details of the new VRT arrangements have been widely leaked. The basis of the tax will change, away from engine size to the amount of C02 emitted by the car. It is expected this measure will be revenue neutral, which means that those who have small and efficient cars will benefit while those with gas-guzzling 4x4s will suffer.

Mr Cowen promised this change in the last budget. But it is not going to come in until July, which will mean a spate of 4x4 purchases in the earlier part of the year. And the question is will it be punitive enough to stop people buying massive 4x4s? It will need to add a good few thousand euro on to the worst offenders to make them unattractive.

A carbon tax and the carbon fund

We had promises of a carbon tax before but it was ditched in 2004 in favour of paying money into the carbon fund (ie buying our way out of Kyoto commitments). It is very unlikely that we are going to see a carbon tax this year.

But what Mr Cowen does with the carbon fund is interesting. It is €290 million at present. If he leaves it alone, or reduces it, it is a sign the Government will get serious about the 3% per annum reduction in carbon emissions (the more we reduce the less money we will have to put into the carbon fund).

The problem with the carbon fund is that we all pay for it. The Greens want a carbon tax applied on the “polluter pays” principle.

I don’t believe there will be any real moves towards this tax until the 2009 budget or even the 2010 budget.