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Ibec backs introduction of carbon tax, short-term carbon budgets

Ibec backs introduction of carbon tax, short-term carbon budgets

The largest organisation representing businesses here is backing the introduction of a rising carbon tax, as well as short-term carbon budgets that would restrict greenhouse gas emissions in particular sectors.

Ibec has also called for changes to the planning system to facilitate a transition to a low-carbon economy and wants supports and incentives to be provided by the Government to meet the €40 billion bill.

The proposals are contained in a new report by the organisation, which outlines its vision for a smart low-carbon economy by 2050.

“Climate change is the single greatest challenge faced by humankind today,” said Ibec Chief Executive, Danny McCoy.

“As part of a wider global response, Ireland needs to play its part by taking decisive action to decouple emissions from population and economic growth, and to transition to a competitive low carbon economy.”

“For Irish business, such a transition presents a ‘no regrets’ opportunity to build a better Ireland,” he added.

According to the report, Irish business fully supports the transition to a low-carbon economy and the Government’s long-term climate ambition.

However, it says achieving this by 2050 will require reductions in emissions in the electricity and transport systems of up to 92%, in the built environment of up to 99%, and an increase of up to 64% in forest cover.

The body wants the carbon tax to be set at €30 per tonne in 2020 and would like to see it rise by a further €5 per tonne every year until it reaches €80 in 2030.
It says the revenue from the tax should be ring-fenced to support low-carbon investment, with a portion used to support poor households and vulnerable business sectors with no practical alternatives to fossil fuels.

Continually reducing short-term carbon budgets also must be introduced for sectors that are outside of the Emissions Trading System, the report says.

This would have the effect of giving better predictability to Ireland’s emission targets and obligations it claims, as well as more certainty to investors.

A “Just Transition” taskforce should also be established, it suggests, and a national social dialogue on climate action should take place.

Building on the work conducted by the Joint Oireachtas Committee on Climate Action in 2019, this would bring together industry, trade unions, environmental groups, local representative and political parties to build a national consensus it proposes.

The planning system also needs to be amended, the document says, to take account of climate action, as set out in the National Planning Framework, it claims.

Changes would need to include better support for the roll-out of strategic energy infrastructure, public transport, afforestation and carbon sequestration, it says.

Supports and incentives also need to be offered by the Government, it says, to help businesses and households with the high upfront costs of moving to low carbon lives.

This shift, the report claims, will require more than €40bn of new capital investment by 2030, with the bulk of that coming through private investment.

In order to ensure a smooth changeover to a lower carbon economy, the decarbonisation process should happen on a phased basis, it recommends.

The security of supply out to 2035 should be studied by the Government as part of the process.

Ibec chief executive Danny McCoy said that Irish businesses are committed to going down the low carbon route as their consumers are demanding the change in direction.

Mr McCoy also said that businesses require certainty around their production base and it is clear that in the future fossil fuels are going to be much more expensive and so they need to make the change to a low carbon environment. “It makes sense, it is a ‘no regrets’ strategy,” he stated.

Ibec wants the carbon tax to be set at €30 per tonne in 2020 and would like to see it rise by a further €5 per tonne every year until it reaches €80 in 2030.

Danny McCoy said that depending on the nature of the relationship between a business and their customers, some of this extra cost will be passed on to the consumer.

“The imposition may be on one sector but who ultimately bears the incidence is really important. That is why in our report we talk about a “just transition”, including a dialogue across our society to ensure there is a just transition to see who is going to be impacted,” he said.

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