Carbon tax on agenda amid 11th hour government formation talks

Targeted refunds for carbon taxes for fuel allowances and home retrofitting projects are among compromises being considered in the government formation negotiations.
Carbon tax on agenda amid 11th hour government formation talks
Fianna Fail, Fine Gael and Green Party negotiators held meetings on finance issues yesterday, as well as on transport funding and projects. Photo: iStock

Targeted refunds for carbon taxes for fuel allowances and home retrofitting projects are among compromises being considered in the government formation negotiations.

But coalition negotiators are still at odds over transport spending and greenhouse gas emissions with just days to go before a deadline for a draft government deal.

Disagreement over wording on using money to pay back a deficit and any heavy borrowing are also understood to be hampering talks.

Fianna Fail, Fine Gael and Green Party negotiators met on finance issues yesterday as well as transport funding and projects.

The three leaders, Micheal Martin, Leo Varadkar and Eamon Ryan also held a scheduled meeting. But time is running out.

At the earlier talks on finance, Fianna Fail and Fine Gael pushed back against Green demands for full refunds for carbon taxes.

The Greens want the tax to be increased to €100 a tonne by 2030 while the outgoing government target is €80. But Fine Gael and Fianna Fail want funds collected from the tax ringfenced for environment measures, welfare or transition projects. The Greens want a 'fee and dividend' scheme, where rebates are given out.

It is understood a compromise is now favoured which would see refunds for sectors and groups, such as fuel allowances and home heating projects.

“We are not going down the road of water charge-style refunds,” said a senior negotiating source.

Broad agreement has been reached by parties on banking, SME and insurance areas, with work by the judiciary and others still leading the way on capping costs for the latter.

But transport spending is still a sticking point, with Green demands for a 2:1 split on public transport versus road projects.

Nonetheless, one senior source said the sides were close to guaranteeing the protection of road projects as well as the two-to-one ratio sought by the Greens plus their desire to see 20% of the transport budget going on cycling and walking.

With just days ahead of when a draft programme for government is supposed to be prepared for leaders, negotiators today are sitting down to discuss arguably one of the most contentious parts of a deal-policies, spending and changes in agriculture.

A key part of this the Greens wish is to see greenhouse gas emissions cut by 7% annually.

Fine Gael rural figures have major fears about this resulting in a cull of the national herd, a major contributor to those gases. But the Greens demand is a 'red line' for a deal.

Fine Gael are proposing Ireland follow New Zealand model's for reducing emissions, treating food production differently and essentially excluding methane produced by cattle from emissions calculations and assigning them a separate target.

Mr Varadkar told a private Fine Gael meeting on Tuesday that this was the party's aim, coupled with a huge scheme of payments to compensate farmers.

But Green figures have a mixed reaction. Some haven't ruled it out but there are questions then about whether it is sound and what then makes up the 7%.

"It's not that the science is iffy on this, it is nonsense," a party source said.

"You're just discounting a chunk of your emissions, people have sought to identify clever ways to get around emissions reduction, and this is one, there are huge levels of uncertainty around it, you're just fundamentally not counting certain emissions that are still there.

"It cuts methane out of the numerator, and gives you a smaller amount of emissions to tackle. It's moving the goalposts.

"We've always sought dispensation from the EU climate targets on grounds of agriculture in Ireland, but ultimately it serves nobody, we don't get the benefit.”

Sources agreed with suggestions the idea was like when Housing Minister Eoghan Murphy tried to recalculate homeless figures.

More in this section

Lunchtime News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up