Irish farmers are bearing an unnecessary additional financial burden with the introduction of the carbon tax.

Last week in Dáil Éireann, I submitted a request to raise this matter on the adjournment but was denied the opportunity by Ceann Comhairle, Mr. Seamus Kirk. Deputy Carey subsequently submitted a number of Parliamentary questions to the Minister for Agriculture, Fisheries & Food, Mr. Brendan Smith and the Minister for Finance, Brian Lenihan (See Replies below)

I supports recent calls by the IFA and others for an exception to be made for the farming community.

This carbon tax is likely to add over €11 million in additional expense to Irish farming at a time when rural Ireland is coming out of one of its worst winters for decades. The price of farm diesel will be increased by 8.75 cents a litre if this is introduced. This will see jobs lost in the agricultural sector, make no mistake about it.

The introduction of a carbon tax is aimed at changing attitudes towards energy and fuel consumption and part of  blanket policy introduced by the Green Party. That’s okay for the family who decide to buy a second SUV, but it is clear that farmers don’t have any alternative open to them to replace using a tractor or other farm machinery in their daily work. Alternative fuels are still a distance away from becoming available at a cost effective price to Irish farming.

When you break it down, the tax on farm diesel is going to cost farm families a total of €12.5 million, not to mention the cost of paying for the tax on solid home fuels which will cost the average family up to €144 per year.

Farmers simply cannot afford this addition levy – and this at a time when prices for produce
is low and state subsidies are being reduced. There must be an exception made for farmers. The Minister for Finance said he would look at this issue, but judging from his reply to my Parliamentary question he seems to be ploughing ahead with the crazy carbon tax on farming.

The other issue of course is that rural households simply don't have an option to cut down on their transport cots as the Government have already reduced rural transport services due to cutbacks.

The Green Party and Fianna Fáil want it every way – you cannot impose a fine on people for going about their day to day business, and then not provide the alternatives. A carbon tax on farming is a direct tax on the price of production. Farmers aren't getting properly paid for produce as it stands not to mention lumping an additional needless charge on the sector.

I am asking that an exception be made on farm diesel within this carbon tax and that rural Ireland be given assistance rather than additional hardship at this difficult time.”

Parliamentary Question No.        357

To ask the Minister for Agriculture, Fisheries and Food his views on whether farmers here can absorb the impending carbon levy on agricultural diesel and that the food industry here can remain competitive in view of the fact that fuel prices have risen dramatically in the past number of months since the introduction of the proposal in Budget 2010; and if he will make a statement on the matter.

– Joe Carey.

For WRITTEN answer on Tuesday, 27th April, 2010.

Ref No:   16345/10     Proof:   411


The Minister for Agriculture, Fisheries and Food: (Brendan Smith)

The implementation of a carbon tax on fossil fuels is, in the first instance, a matter for my colleagues, the Minister for Finance and the Minister for the Environment, Heritage and Local Government. The Finance Bill, 2010, introduced carbon taxation of mineral oils, which will apply to petrol, auto-diesel, kerosene, marked gas oil, liquid petroleum gas, fuel oil and natural gas. These increases, which, when VAT is included, amounted to 4.2 cent on a litre of petrol and 4.9 cent on a litre of diesel, arose from the application, in budget 2010, of a carbon charge on those fuels, at a rate equivalent to €15 per tonne of CO2 emitted.

When introducing the levy, Minister Gormley explained the principle of carbon pricing, noting that this mechanism is widely accepted as the most effective way to secure emission reductions. It is the basis of the EU’s Emission Trading Scheme, which applies to the bigger emitters such as power generators and industrial plants and a significant number of food processing installations. Apart from installations that have already made very considerable emissions reductions through their participation in the EU’s emissions trading scheme, no other sector of society is exempt from the tax.

The aim of the carbon tax is to promote economies in the consumption of fossil fuel and a consequent reduction in emissions.  At present, each litre of gas oil, whether used in a tractor, diesel engine car or truck, generates the equivalent of almost 3 kilograms of Carbon Dioxide (CO2). In 2008, greenhouse gas emissions associated with the combustion of fossil fuel in the agriculture sector were over 850,000 tonnes of CO2 equivalent. The imposition of the carbon levy is not without consequence for farmers and for tillage farmers in particular.  However, the agriculture sector will continue to benefit from a special reduced excise duty rate of 4.7 cent per litre in relation to marked gas oil, which is far below the excise duty rate of 41 cent per litre applied to auto-diesel.

Together with my Government colleagues, I intend to ensure that up to date guidance material is provided on how best to reduce fossil fuel based energy use. My colleague, the Minister for Finance has indicated me that the estimated amount of revenue arising from a carbon tax of €15 per tonne on marked gas oil or ‘green diesel’ used by farmers is €12.5 million in a full year, and, being applied from 1 May, approximately €7 million in 2010.

Energy costs are a significant proportion of production costs for food and drink exporting companies. As costs in Ireland are above the EU average and our indigenous energy sources are limited, this is a competitive issue for the industry.  The continuation of some costs rebate for large energy users and industry’s own efforts to make their heat and power systems as energy efficient as possible have mitigated this to an extent but it requires continued attention as the Agri-food sector generates around 30% of our net foreign earnings from the indigenous manufacturing and primary sectors.

Greenhouse gas emissions from agriculture have not grown at the rate of other sectors but do account for almost 40% of Ireland’s non- trading sector emissions. Teagasc is engaged in practical research at farm level on farming techniques that could contribute a modest but permanent reduction in the level of emissions.

Addressing these critical issues, requires a greater commitment to, and implementation of, energy savings and efficiency measures, as well as the development and  promotion of  large scale uptake of energy from renewable sources.  The government has encouraged measures relating to forestry, the growing of miscanthus and energy conservation to promote local and renewable sources of energy.


NO  70

To ask the Minister for Finance the reason behind the introduction of the 8.7% carbon tax on agricultural diesel as against the 4.4% levy on road diesel; and if he will make a statement on the matter.

– Joe Carey.

*    For WRITTEN answer on Thursday, 22nd April, 2010.
Ref No: 16156/10


Minister for Finance ( Mr Lenihan) : I announced in Budget 2010 that a carbon tax at a rate of €15 per tonne was being introduced on fossil fuels. The tax was applied to petrol and auto-diesel with effect from midnight, 9 December 2009; and will apply from 1 May 2010 to kerosene, marked gas oil (also known as ‘green diesel’ or ‘agricultural diesel’), liquid petroleum gas (LPG), fuel oil and natural gas. The application of the tax to coal and commercial peat is subject to a Commencement Order. The Budget announcements on the carbon tax have now been enacted into legislation through the Finance Act 2010.

The new carbon charge is based on the emissions that arise from the fuel used. Consequently the carbon tax charge in respect of marked gas oil and auto-diesel (which are almost identical fuels) is around the same i.e. 4.1 cents and 3.9 cents per litre respectively (excluding VAT). The carbon tax charge is marginally higher for marked gas oil because it is a slightly denser fuel with slightly higher emissions than auto-diesel.

While the percentage increase in the price of marked gas oil arising from the introduction of the carbon tax is higher than in the case of auto-diesel, this is a function primarily of the fact that marked gas oil has a lower base price due to the considerably lower level of excise duty on that product compared to auto-diesel.