Carbon tax ‘could cost firms €1bn’

GREEN taxes and levies could cost business €1bn from 2005, according to a consultant.

A&L Goodbody consulting managing director Peter Brennan speaking at a seminar on the impending emissions trading scheme said: “implementing a carbon tax and a scheme designed to reduce carbon emissions may cost heavy energy users and the enterprise sector over €1bn from 2005.”

Mr Brennan said the Government estimates that €510m could be raised if the proposed carbon tax is introduced as planned. “In addition, some 40 energy producers and heavy energy users could face additional annual costs as high as €600m per annum, according to an Indecon report for IBEC. The enterprise sector is facing a serious challenge to meet the tough target set in 1997 to limit greenhouse gas emissions. The cost compliance burdens arising from the Government’s proposals should not be disproportionate to the perceived benefits,” said Mr Brennan.

However, he believes the Government could reduce the overall scale of the problem, in the context of a statement on national energy policy, by indicating the scope for fuel switching and by incentivising investment in Combined Heat and Power plants, which he says is the case many other EU countries.

Mr Brennan pointed out that as the EU as a whole was on target to comply with its greenhouse gas reduction target of 8% by 2008, and as two major manufacturing plants had closed in recent years (Irish Fertilisers Industries and

ISPAT), there might be scope to implement a less severe emissions trading regime than the one currently envisaged for Ireland’s enterprise sector.

Background info on emissions trading and the carbon tax can be found on www.emissionstrading.ie