Government subsidising fossil fuel industry to tune of €2.4bn a year

Extent of State support for production and consumption activities revealed by CSO

Eoin Burke-Kennedy

The Government provided €2.4 billion in subsidies to the fossil fuel industry here in 2018, according to the Central Statistics Office (CSO). This was an increase of 8 per cent on the previous year and an increase of 70 per cent on 2000 when the total was €1.4 billion.

Fossil fuel subsidies can support either production or consumption activities. The single biggest component of the Republic’s subsidies is the excise duty exemption for jet kerosene used for domestic and international commercial aviation. The revenue forgone from this measure in 2018 was €626 million. The Government continues to subsidise peat-fired electricity, which is one of the most polluting ways of producing electricity, through the Public Service Obligation levy on electricity consumers.This amounted to €66 million in 2018. Peat is burnt at Bord na Móna’s Edenderry power station and two ESB facilities in the midlands, which are due to close this year.

Development plan

While the Government’s new national development plan envisages a radical overhaul of how the State tackles climate change it only puts a 2030 deadline for the conversion of peat-burning power plants to more sustainable low-carbon technologies. The VAT refund on autodiesel for business use was €285 million in 2018. “People living in rural areas often have fewer public transport options available to them and may have longer commuting distances,” the CSO said. “Increasing the effective carbon price of autodiesel would probably have a greater impact on rural households than urban households,” it said.

The CSO also analysed the average effective carbon rate per tonne of carbon dioxide emitted for the main fossil fuels. Petrol, used by private motorists, had the highest rate at €258 per tonne of carbon dioxide emitted. The average effective carbon rate on autodiesel was €184 per tonne of carbon dioxide due to a lower excise duty rate than petrol.

Note: This blog is a re-post of the original posted on The Irish Times website.