Colm McCarthy: Taoiseach's remarks will be welcomed by farming interests

Last Thursday, the government released a progress report on its Climate Action Plan and the Taoiseach had some interesting things to say.

Regular readers will know that the way carbon emissions are measured can penalise exporting countries and Ireland’s agriculture registers a high share of total Irish emissions because of exports.

This is reflected in the EU’s territorial targets, which are based on production rather than consumption, hence the pressure to limit agricultural emissions here.

The Irish national target for 2020, mandated by the EU and which will be missed, includes emissions from food produced here

The logic, were worldwide emissions to be allocated consistently in this fashion, would be to blame Saudi Arabia for transport emissions: this would be ridiculous and emissions for petrol and diesel are counted in the consuming country, where taxes are levied and actions taken to limit consumption of the offending commodities.

The Irish national target for 2020, mandated by the EU and which will be missed, includes emissions from food produced here and consumed elsewhere, but also includes oil products consumed here but produced somewhere else.

Efficient production

In a world where goods and services are traded so widely, the most logical approach is to discourage the consumption of items which entail carbon emissions through some carbon pricing mechanism, ignoring the location of production.

This is what we do for Saudi Arabian oil products, but not for Chinese steel, where production has been outsourced, along with the associated emissions.

Chinese emissions, measured on a production basis, exceed emissions measured in consumption and Irish agriculture is in the same position.

This is what Leo Varadkar had to say: “I think as we get beyond 2030 and we get into much more ambitious targets than we currently have, I think, on an international level, we’re going to have to consider whether we treat food differently because we are a country that exports 90% of the food that we produce.

"We’re a country of five million people that feeds 50 [million] and yet all that food production gets accounted for in Ireland as a contribution to global warming. But that food production is going to have to happen, it’s going to have to happen somewhere.

"We’re going to need to look at that on an international level and see if we need to treat food production differently to the way we treat transport or electricity and that we can actually move fully over to the renewables and away from fossil fuels.”

This is an old issue in the economics of climate change.

The world, inconveniently, has just one atmosphere

Since world production equals world consumption and since production is best allocated to the territories with the most favourable costs, a universal policy should aim to discourage consumption of carbon-intensive products everywhere and let the geographical pattern of production take its course.

The world, inconveniently, has just one atmosphere, but is divided into 200 countries and the UN convention, since it began almost 30 years ago, has taken the path of allocating emission targets to individual countries. This has been followed in the European Union and Ireland agreed to production-based ceilings at a time when dairy output was artificially constrained by quotas.

Nobody suggests that Saudi Arabia should respond to inadequate taxes on automotive fuels in importing countries

The Taoiseach’s remarks will be welcomed by farming interests and represent his first acknowledgement that Ireland is a victim of an internally inconsistent approach to measuring and controlling emissions.

Nobody suggests that Saudi Arabia should respond to inadequate taxes on automotive fuels in importing countries by closing low-cost and efficient oilfields, and it makes no more sense to constrain efficient dairy producers in Ireland.

The corollary is not as welcome, but will have to be acknowledged, too – if a pound of butter consumed in an importing country contains emissions, just like a litre of diesel consumed in Ireland, the reduction of emissions implies action to constrain consumption, including taxes if needs be.

Production of fossil fuels in Saudi Arabia would be controlled with taxes in Ireland.

Consumer-end policies

But if Irish policy is being rethought, it needs to be a consistent re-think. The European Commission has finally come around to the view that consumer-end taxes and charges are the way to go for the aviation industry, a sizeable emitter and one which has led a charmed life, with no taxes on jet kerosene and no VAT.

The Commission is considering a carbon tax on jet fuel, which generates per-litre emissions comparable to diesel.

It is in the national interest that efficient sectors be unconstrained by production quotas

This makes perfect sense and has widespread support, but not apparently from Ireland.

The Department of Transport has been quoted to the effect that Ireland will oppose this initiative, on the basis that it would discourage airline traffic and hence ‘connectivity’, whatever that means.

It is in the national interest that efficient sectors be unconstrained by production quotas and that the European Commission be supported in any move to consumer-end policies. The Taoiseach’s epiphany on agriculture should be welcomed, but he needs a word with his transport minister.

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